More precisely the </font> turns off all the settings of the corresponding <font ...> command.
Imagine something like this:

<font color=red>
        Some red words
        <font size=5>
                some big red words
        </font>
        some still red, but no longer big, words
</font>
From here on all is normal again.

this should appear as:

Some red words
some big red words
some still red, but no longer big, words
From here on all is normal again.