Recognition of font families

I'm having trouble understanding how the recognition of font families
should happen. Can anyone help?

My experiments with MSIE4b2 and NS4 seem to illustrate:

1) MSIE recognizes all five generic font families according to CSS1
(serif, sans-serif, cursive, fantasy, monospace), BUT ONLY if it's the
first or only choice in the list. 

2) NS does not recognize cursive at all. For fantasy it substitutes a
sans-serif font. Serif works only if it's the second choice, but not the
first (go figure).

You can see it all on this demo page:
(Set your default font preference to something ridiculous, like Ransom
Paste or Old English and the failures will stand out easily.)

In a techno-philosophical sense, I'd like to know what exactly fonts
"know" about themselves. Are (or should) digital font descriptions be
written in such a way as to include the generic family? Should they also
know what more general family style (like Old Style or Classic) that
they belong to? Or is this the job of the interpreting agent (i.e.,
browser or OS)?

I'd appreciate any enlightenment the font experts can offer.

Gayle Kidder