It's up to date with origin/master, which is the local copy of the remote master. 'git fetch' updates those local copies. 'git pull' does a fetch and then merges origin/master into master.

It makes sense when you consider that there are other ways that origin/master could be updated. You could apply commits that someone emailed you (a common workflow in the Linux kernel that git was designed to support), or someone could push commits directly to you over SSH or the filesystem.