What does "modified" in git status mean?

[Mikolas <mikolas.janota@gmail.com>]

I am using git version 1.7.5.1 under cygwin and I'm getting behavior that I'm 
not understanding.

When I do 'git status' in the root directory of the repository, it shows no 
difference. Once I cd to a subdirectory, it starts showing modifications. 
However, 'git diff' shows nothing. 

So it looks something like this:
$ git status
# On branch master
nothing to commit (working directory clean)

$ cd foo
$ git status
# On branch master
# Changes not staged for commit:
#   (use "git add <file>..." to update what will be committed)
#   (use "git checkout -- <file>..." to discard changes in working directory)
#
#       modified:   ../foo/bar

$ git diff
$

I put the following in my gitconfig but that doesn't seem to be doing much.
[core]
       trustctime = false
       autocrlf = input

So my questions are 
1) Is there some way how to tell status to tell me *why* the files are marked 
as modified?
2) Is it normal that git status behaves differently in different directories?

--mikolas