What does "understanding" mean?
The findings are consistent with current understanding of neuroscience, and align with discoveries such as grid cells. They also provide a basis for explaining what's actually happening in the brain with phenomena like memory palaces, rapid and efficient physical control of the body, combining sense modalities such as sight and touch when catching a ball, and so on.
Understanding is what happens when your brain has developed a neural structure such that it's able to predict events successfully based on the thing that was understood.
Likewise we learn general concepts and they can be applied to a wide range of scenarios. I can't see any other way AI could learn unless it mimicks our own.
Understanding while not completely described by situational awareness definitely has some relationship to it and you could probably use similar constructs for defining it
In this sense, an AI could be said to Understand language if it used it as one of a selection of tools to operate on itself, a peer or other being, or its environment.
One of those capabilities would be the ability to contextual an object/statement within multiple frames of reference while also being able to compare and contrast the different instances of those contextualized objects/statements.
This is what allows a child to identify a bird as any number of physical specimens of different species (chicken, goose, eagle, sparrow), while also identifying cartoon depictions that talk and simple drawings (Twitter icon) as birds as well... while also "understanding" that while the Twitter icon can be called a bird, it is not actually a real bird ("Ceci n'est pas une pipe") and it would not be expected to sing or fly like a backyard sparrow (unless it was animated, which would make still make sense to a child).
I think this also what rise to our ability to "understand" jokes, puns, and other turns of phrase - "I just flew in from Boston, and boy are my arms tired!" - this dumb joke requires a number of concepts that need to be contextualized before you can "get" the absurdity of stating that a human might tire out their arms while flying... like you might think a bird would.
The code for "understanding" is part of Generic Human Firmware codebase and is tightly integrated with the OS.
Unfortunately it hasn't been open sourced.