The pneumonia could be a factor, but non-diabetics usually don't go up that high even when they're sick. The A1c will tell the doctor whether these blood sugar readings are recent or not.
With blood sugar in the 200 range and sugar in his urine, your doctor will probably prescribe insulin. Type 1 diabetics can lose pancreatic function very quickly or very slowly over a period of years ('honeymooning'), but if he is Type 1 and his blood sugar has already climbed to those levels, then that would suggest he's not making a lot of insulin right now.
Since he's only three years old, the doctor will have to instruct you on how to administer the insulin injections and how to dose accordingly (number of units based on carbohydrates consumed). You'll be learning all about basal insulin and bolus insulin.
You may want to talk to the doctor about an insulin pump.
You'll need to buy a home glucose meter and test strips so that you can test your son every day. Low-carbohydrate diets usually aren't recommended for children, so your son will probably maintain a diet similar to the one he has now, except you'll have to carb count so you know how much insulin to give him. You may consider investing in a food scale - they're invaluable for diabetics.