Explanation
The method sums up all values up to the given argument. The argument is 3, the result is thus 6 = 3 + 2 + 1.
Therefore, the method uses recursion. That is, the method calls itself. It exploits the property that
sum(n) = n + sum(n - 1)
for any integer n.
Iterative
Let's first take a look at an equivalent method that don't uses recursion:
public static int sum(int number) {
    int result = 0;
    for (int i = number; i >= 1; i--) {
        result += i;
    }
    return result;
}
Called with 3 the method has three iterations. It adds 3 to result, then 2 and finally 1, resulting in 6.
Recursive
Your recursive method does a similar thing. It takes 3 and adds the result of sum(2) = 2 + 1 to it. sum(2) is computed with the same technique, it takes 2 and adds sum(1) = 1 to it. sum(1) itself does not trigger another computation since it does not call sum again, take a look at your code:
if (number == 1)
    return number;
Again, let's take a look at the code:
return number + sum(number - 1);
So calling with 3 yields 3 + sum(3 - 1), which is 3 + sum(2). In order to compute this, the method sum must be called again, with the argument 2. Calling with 2 yields 2 + sum(1). In order to compute this, the method is called with 1. The call returns 1.
Substituting everything back yields:
sum(3) = 3 + sum(2)
       = 3 + (2 + sum(1))
       = 3 + (2 + (1))
       = 6