Yes, but that's the point, it doesn't actually "understand". When it answers a question in the category of "rhyme time" it's not because it actually understands what a rhyme is, but because it's been programmed to. If Jeopardy renamed the rhyme time category "time rhyme" (requiring the contestant to rhyme AND invert) watson would be up the creek, whereas someone like Ken Jennings could probably even figure it out without Alex Trebek explaining the category, and you or I would figure out the scheme after flubbing the first one.