When the Thumbnail/Medium/Large image dimensions via Settings -> Media, the custom-defined sizes in the insert-image modal window do not change and neither do the actual images themselves. Anyone have an idea as to where the bug might be?
The image dimensions for thumbnails are specified in functions.php. You may change the image dimensions, depending on your project. Whenever you change the image dimensions, (to my understanding), you need to regenerate the thumbnails.
modestkdr is correct. Changing the dimensions in the settings doesn't magically resize all of the images on the server, they need to be regenerated.