What does this traffic sign indicate?

You answered correctly. This sign indicates a numbered diversion route (Umleitung) labeled "U3". In German traffic rules, when a road is closed or blocked, diversion signs with a yellow background and a "U" plus a number direct drivers along an alternative route. This helps manage traffic smoothly around obstacles or construction sites. It is not related to tram lines or underground car parks, which have different signs. Remember, the yellow background and the letter "U" followed by a number always signify a detour in Germany.