Child with max-height: 100% overflows parent

I’m trying to understand what appears to be unexpected behaviour to me:

I have an element with a max-height of 100% inside a container that also uses a max-height but, unexpectedly, the child overflows the parent:

Test case: http://jsfiddle.net/bq4Wu/16/

.container {  
    background: blue; 
    padding: 10px; 
    max-height: 200px; 
    max-width: 200px; 
}

img { 
    display: block;
    max-height: 100%; 
    max-width: 100%; 
}

This is fixed, however, if the parent is given an explicit height:

Test case: http://jsfiddle.net/bq4Wu/17/

.container {  
    height: 200px;
}

Does anyone know why the child would not honour the max-height of its parent in the first example? Why is an explicit height required?