Is this a thing?
Both of my SD Cards have their sized greatly reduced after an format emunand option using Gateway launcher.
My 2GB SD card became 911 MB
My 4GB SD card became 2.77 GB
Or am I missing something?
This is normal, yes. Your emuNand resides in a separate partition on the card. The partition doesn't show up normally because the computer doesn't know how to read from it, but you can see it using a partition manager (such as Control Panel > Administrative Tools > Disk Management in Windows). This partition will be around 1 GB in size, and you can use the emuNand Tool to easily extract/restore it for backups. If you are no longer going to use the SD card in your 3DS, you can reclaim the space by redoing the partitions, Windows has a utility called Diskpart that can do this, and guides should be available pretty easily.
Each time you set up emuNand, the Gateway launcher clears out all partitions and sets them up again, so you only ever have one emuNand partition, you won't be losing a GB each time you do it. Trying to format the SD card through Windows only resets the "visible" partition, and won't touch or reclaim the emuNand partition's space.
I'd still recommend getting a larger card so you can have more room for installed CIAs, especially the larger ones, but that's a personal preference thing, I suppose.
I hope this helped answer your questions. If you have any more, please go ahead and ask them, and I'd be happy to help out.