For the sake of this conversation "understanding" implicitly means "understand enough about it to be unimpressed".

This is what's being challenged: That you can discount LLMs as uninteresting because they are "just" probalistic inference machines. This completely underestimates just how far you can push the concept.

Your pedantic definition of understand might be technically correct. But that's not what's being discussed.

That is, unless you assign metaphysical properties to the notion of intelligence. But the current consensus is that intelligence can be simulated, at least in principle.