Does meraxes count 4 strength while it is kneeling?

Yes.

Generally, card effects work regardless of whether the card itself is standing or kneeling - unless they specifically say otherwise (e.g., "while standing, this card does..."). So, for example, locations with the "+1 Gold" location will add the gold to your income count whether they are standing or kneeling because they don't say they only work while standing. Similar thing with Meraxes.

But, of course, if you have to kneel a card to pay it's cost (e.g., "kneel this card to..."), you won't be able to use the card while it is kneeling.