It seems that they are using Medium to indicate "average", as in the average size portion that a person might eat. If you are really hungry, you might want a slightly bigger portion, so you'd go for Large, and if you are both very hungry and a big eater, you would be sure to order Extra Large. If they kept the sizes of their meals exactly the same, but they labelled them in the logical order of Small, Medium, Large, average eaters would end up a few sizes bigger and dieters would feel very virtuous but never get any thinner!

An entirely different question is what different places consider an "average" size meal to be. We've been to places in the north of Spain where we'd end up requesting "quarter rations" of the regional dishes, and even those were pretty big helpings! The locals would look at me with pity, but my partner got those looks that said "You wimp!"