You may be tempted to conclude that. Then you find something else to ask that leads to an answer obviously nonsensical to a human being, or it hallucinates something, and you realise that, in fact, that's not the case.

IMHO 'understanding' in the usual human sense requires thinking and however good and fast improving LLMs are I don't think anyone would suggest that any of them has become sentient yet. They can infer things based on their training data set better and better but do not 'understand' anmything.

This is a deep and complex topic, and has been for decades.