Usually when a dentist says he is placing a medicated filling he means a filling that will release medication to the tooth. Most often dentists are referring to a temporary filling that has eugonol in it since it is a natural abtundant and has a sedative effect on irritated pulps. In my practice I use IRM for my 'sedative' fillings since it releases eugonol but it also is strong enough for long term use. It also seems to have antimicrobial properties and helps prevent teeth from experiencing recurrent decay prior to the placement of a permanent restoration.
Other types of 'medicated' fillings that dentists use are Glass ionomer based, since they tend to release fluoride over time. In my practice I make frequent use of a modified glass ionomer cement aptly named Miracle Mix since it is strong and seems to have properties that definitely inhibit recurrent decay adjacent to these restorations. Miracle Mix is made by taking the powder from amalgam capsules(sans mercury) and mixing it with glass ionomer powder to create a new hybrid cement restorative. The metal fillings from amalgam have copper,and silver and other metals that most likely provide additional antimicrobial protection above and beyond normal glass ionomer formulations. It has only one real drawback. Miracle Mix fillings are grey in color and can not be placed in areas where esthetics is important.