Setting the policy configures the cache size that Google Chrome uses for storing cached media files on the disk, regardless of whether or not users specify the --media-cache-size flag. The value specified in this policy isn't a hard boundary, but a suggestion to the caching system. Any value below a few megabytes is rounded up.
Setting the value of the policy to 0 uses the default cache size, and users can't change it.
Leaving the policy unset uses the default cache size and users can change it with the --media-cache-size flag.