in "CSS: The missing manual" the author says that font-size: medium (or other size keywords) sets the font relative to the browser's base font size.
But what I'm seeing in FF2 and IE6 is that it sets the font size to what I specified in the .CSS HTML or BODY style (which is much preferred).
If it works the latter way, this is very handy if you have nested styles and you know you want some text to be the body font-size (i.e., "normal sized text").