Step 1: Recall equivalent definitions.
Reduction is defined as the gain of electrons, loss of oxygen, gain of hydrogen, or a \(\downarrow\) in oxidation number.
Step 2: Evaluate options.
(1) Gain of oxygen implies oxidation, not reduction.
(2) Increase in oxidation state implies oxidation.
(3) Gain of hydrogen implies reduction (correct).
(4) Loss of electrons implies oxidation (reduction is the gain of electrons).
Final Answer: \[ \boxed{\text{gains hydrogen}} \]