The mathematical term for the four by four matrices you were looking at is "quaternion" (I.e. you were looking at a set of four by four matrices isomorphic to the unit quaternions).

Why use quaternions at all, when three by three matrices can also represent rotations? Three by three matrices contain lots of redundant information beyond rotation, and multiplying quaternions requires fewer scalar additions and multiplications than multiplying three by three matrices. So it is cheaper to compose rotations. It also avoids singularities (gimbal lock).