It's a common misconception that the green button seated among its red and yellow companions is the Full Screen button. As you've noticed, in some cases it may be (though not in the Lion sense of taking over the entire screen and creating a separate Mission Control environment but rather in causing a window to fill the screen), in others, it expands the window in one way or another. In one isolated instance it minimizes a window and shows a set of mini controls.
We'll start with Finder windows. How the window expands depends on the number of items in it. If you're dealing with a window in Icon view that has just a handful of items in it, clicking the green button will expand the window so that you can see all the items in it. If you're in List view, the window will expand not only to show the items in it, but also stretch sideways to display all the columns within that window. (CoverFlow works similarly.) In Column view the window will expand to show you as much of the visible hierarchy as it can.
If a window has more items than can be displayed, the window will expand up and down as far as it can manage. In Icon view the window will cycle through different expansion views, eventually getting to a full-screen view. Clicking the button while in List view never fills the screen.
If you hold down the Option key while clicking the green button, any open windows will expand, not just the currently selected window. This works in applications as well.
Speaking of applications, the green button almost always works as a toggle between the state the window is currently in and its expanded-so-you-can-see-as-much-of-the-content-as-possible state. For example, if you've resized a Safari window to show just one column of a web page, clicking the green button expands the window up and down as well as to the width of the web page. Click it again and the page returns to its original size. If you've made a Pages document smaller by dragging one of the sides or corners, clicking the green button expands the page so you see as much of its length and width as possible. However, if a page started at its expanded size--say a Keynote presentation--clicking the green button does nothing because its current and expanded size are the same.
But there are exceptions. Click the green button in Mail, iPhoto, iCal and iMovie, for instance, and in each application the window will expand to fill the screen. Do this in iTunes and the iTunes window shrinks down to a mini-player.
If you're the kind of person driven to distraction by inconsistency, the green button's behavior may indeed plant you firmly in the passenger seat. But step back and it makes some sense. The button is designed to show you as much information in a single window as is practical. It just happens that there's a measure of leeway in how that's interpreted and achieved.