A medium shot refers to a shot taken from a "medium-distance", although not a quantifiable one. In film, they are usually used to capture at least half of a person's body within a frame, or even a small group of people. The camera isn't too far to capture the entire setting (long shot) or too close to a person's face (close-up). Here's an example:
A wide ...
I have been unable to find any specific interviews or sources that explain this part of the movie, so the best I can do is present my own personal theory.
Small town conspiracy theorists
The movie is filmed and set in small town Pennsylvania where Shyamalan grew up. I believe this scene portrays an attitude of small town locals that he is used to from ...
This is directly addressed at around the 1 hour 15 minute mark. After turning off the flashlights in the basement, there's a brief flashback to the death of Graham's wife. Then, as he wakes up the next morning the radio is on. A voice is heard:
People think they came here to take over the planet, that's bull. I
don't think that. My friend ...
Hm, while I don't think the film presents enough evidence to say that the aliens were evil, they definitely seemed aggressive - which justifies the Mel Gibson's family in defending themselves.
Throughout the last quarter of the movie the aliens are trying to get into their house and into the room that they are hiding in. This is an aggressive and arguably ...
We don't know
In fact, as I recall, the we only see the spacships as lights in the sky in a news report.
Their physical location once landed (assuming they do) is not stated. It might be that these aliens we see on the ground are a "landing party" and the spaceships are, in fact, still in orbit.
It might be clearer to read the quote like so:
And once again he uses camera tricks - like the distorting effect that wide angle lenses have on medium shots - to create a weird, slightly off-kilter world.
The effect they are describing is the result of decisions made regarding:
a camera lenses angle, and
the proximity of the camera to the subject.