Just because DNNs are hot right now doesn’t mean much. If you follow machine learning long enough, you’ll see hype cycles for various techniques. Neural nets used to be hot in the 80s, until they weren’t, and now they are again. Something else will come along soon enough. We use the techniques we do usually because the math works out, not because it’s anything like how our brains work.
In the first case, your new argument does not make sense, because the complexity of implementation does not matter to the result, and there's a clear improvement to it.
In the second case, I can assure you lots changed. The recent major things being ReLUs, self-supervised learning and attention mechanisms.
What test is there to quantify understanding that has been used to determine that it hasn't gotten better?
It seems to me that a lot of the things that are posed as hard things for AI to do are poorly defined phenomenon which we have no empirical test for that we simply infer to be explanations for observed behavior of humans that critics assert that AI can't do without evidence or even a definition upon which a search for evidence could be based.
we don't, but this is simply the faulty 'god of the gaps' reasoning applied to neural nets instead of deities. It doesn't really provide any insight or value to believe that neural nets are supposed to somehow magically solve problems they apparently can't solve.
Neural nets already consume significantly more compute and energy than even primitive biological agents with significantly worse results, so it appears to be very obvious that they aren't the whole story.