There's a pretty wide spectrum of how people interpret "defund x". US Republicans have agitated for "defund Planned Parenthood" for a while, and by "defund" they meant "don't give any tax dollars to it" [1]. In that context, it's not really surprising that a big chunk of the population "misunderstand[s]" the phrase. They may be inferring the wrong context, but the word has definitely been used that way.

[1] https://www.ernst.senate.gov/public/index.cfm/2019/1/ernst-i...