They are still permitted to fight certain wars against each other. A lower vassal may still try to depose his direct liege even if CA is at medium.
If you have multiple King titles, or control multiple de jure areas, remember that the laws interact with their de jure areas only. Say you have the King of Ireland title and raise CA to medium: this applies to every province that is considered de jure (lawfully) apart of Ireland. Provinces that fall outside of that de jure (for instance, those that belong to Scotland) will NOT be subject to those laws, even if you are the de facto ruler of those lands.
This is also true if your vassals claim land that belongs outside a de jure kingdom. So if some of your dukes have provinces that fall outside of Ireland's laws, say in Wales, they may fight each other over possession of those Welsh provinces because they aren't considered to be affected by the crown laws of Ireland.
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