It's easier if we interpret that problem as if it had read:

There is/are:
1 digit smaller than 1, 
2 digits smaller than 2,
...
9 digits smaller than 9.

That's 1+2+3+4+5+6+7+8+9 = 45 ways to choose the tens and units digits.
For each of those there are 9 ways to choose the hundreds digit.

Total: 45*9 = 405
 
Edwin