How can I reset my 3rd gen apple tv device to factory settings if i have forgotten the 4 digits passcode

In Reset or restore your Apple TV to its factory settings Apple has these instructions:

Reset or restore your Apple TV (3rd generation) or earlier

1. Select Settings > General > Reset.
2. Choose one of these options:

• Reset All Settings: This option resets your settings, including your accounts and configurations.
• Restore: This option returns your Apple TV to its factory settings and installs software updates. This option requires Internet.

3.Keep your Apple TV plugged into power until the Reset process finishes. Then you can set up your Apple TV again.

The passcode you mention is most likely used when you first used AirPlay with your Apple TV, as Apple describes in the support document If you're asked to enter an AirPlay password on Apple TV:

The first time you use AirPlay with your Apple TV, you'll see an onscreen password. Enter the password into your device to stream content to Apple TV.