It's adaptive. As the game progresses, your average gain per play causes this to gradually adjust so that if you're gaining a large amount on each play, "short" gradually grows to be a longer amount. Essentially, "medium" is the distance that you will likely make a first down in the remaining plays that you have to do so, "short" means that the distance is less than your average yards per play to get a first down, and "long" means that the distance is more than your average yards per play to get a first down.
The rate at which this adjusts is controlled in your misc gameplan option "Gameplan adjustment speed." The technical explanation is that this is the weight that each play is applied to update the average. The default of 5 will not change short, medium, and long ranges very much unless you are very consistently performing extremely well or poor. If you set this to 100, it will only consider the most recent play.