No, you do not understand this correctly.
Also this has not changed in 4.0.
“Before, when scaling the Z axis in Global, it looked like the it was scaling on the Y axis instead. If you changed to the Local orientation it was supposed to point to the Z axis…but it was still so confusing.” Sounds as if you mixed up Global and Local here; maybe your memory plays tricks on you (mine does that all the time 😉).
So, in short: Nothing was broken and nothing has changed (as far as this Global/Local is concerned).