Those are cactus pups. This cactus will form a cluster with age.

You should water it when the soil is bone dry, but give it a really good soaking, i fill up a bucket and sink the whole pot under the water so the center of the root ball gets water. The way you are watering it the cactus must be very thirsty, i bet if you watered it my way you would notice a huge difference in a very short time!!

Hi giwaffe,

So far, the pot looks to be the right size. If you want to pot up, only go about an inch bigger.
Your watering is another story. Your plant should be in a pot with a drainage hole, and your mix (at minimum) should be 50% cactus mix and 50% perlite. You want a mixture that is fast draining. Never water a cactus or succulent immediately after repotting/potting up....always wait about a week. Then, water thoroughly. This means water until you see it draining out the hole. Let the plant dry out then repeat. Terra cotta pots work best for this because they are porous and will allow the soil to dry out quicker. If you don't like the look of terra cotta, pot the plant up in one and then put that pot into a nicer container to catch the water. Just remember to empty the nicer pot.

Nancy

Was it recently fertilized. This is quiet normal for it to grow into a clump. It may not flower while it is producing offsets. your offset are large enough to be removed carefully. This will tell the plant to put it efforts into make a flower and seeds. Set the offset on top of pot of fast draing mix. don't water until you can tell that there are roots, in a month give a gentle tug holding the top of the new offset. Water thoroughly once a month, you may set the pot into a plate of water to water from the bottom. There is a reason for this can't type it now. HAnd is tired, I quit now. Norms