Setting a fluid content width

$content_width is a global variable that can indeed be used by themes and plugins to set a maximum width on content elements. Therefore it’s always a fixed value in pixels. The plugins don’t know about your css.

However, this does not limit your possibilities in your theme. You can still set image sizes larger than $content_width and use them. Keeping the theme fluid is a matter of css.

The thing you’ll find is that embeds (amongst others) use $content_width to determine their max width. So make sure that it is larger than the max column in your site if you want it to fit neatly.