I think it has to get bigger than that and the pod eventually pops open and exposes the seeds.

so I should wait? when should I plant them? and when can I tell it will be ready for me to cut? Are there a number of seeds in there?

I was going to post photos of my mom's Michelia alba tree and ask the same thing... having seen your photos, I'd have to say that my mom's alba tree as well as yours do have seed pods on it. There are lots of pods on her tree in varying stages of growth. The pods will eventually ripen (turn red, at least on her tree) with the pods popping open and exposing the seeds. I found three seeds -- two still attached to the pod and one on the ground -- which I plan to pot up today. From what I've read online, the alba produce mostly sterile seeds, but I'll plant them anyway to see if it will still grow.