Yes it's medicated, but what does it exactly treat?

i recently used it for helping with internal bacteria problems, and it worked a treat

That's exactly what it's designed to treat - internal bacterial problems. So it's good for things like septicemia, hole-in-the-head disease, popeye, dropsy etc.

I found it works pretty well on finrot too though.

Does it have to be soaked before giving it to the fish?

I don't believe so (and Goldfish Connection doesn't say it should be). It's a very dense pellet which doesn't contain much if any air, so it's not likely to cause SBD problems. Plus, I'd be concerned about the active ingredients leaching out into the soaking water and reducing efficacy.

I think Metro-gold is suppose to be better suited to help with Dropsy than Medi-Gold. Both can be ordered from GF connection.