What does "modified" in git status mean?

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