Two Spanish Colonial Coin Medal

That is correct, carmykle, it refers to the city. Probably the townhall of San Luis Potosí gave it away during the celebration of independence day or month in 1828. It was made to honour the independence heroes; as a cultural note I will add that, the Mexican Independence War started on september 16, 1810 and officially finished the 21st of september of 1821.
The custom of giving away medals at oficial parties and events came from the spanish colonial courts, they would even throw them into the streets from balconies or stagecoachs so the townsfolk would participate of the festivities.



It is not 3 reales size; it is 2 reales size, but I would not call it rare. It must have been treasured because you do not find it in low condition.