Can dogs really understand humans

Yes they do. Dogs can interpret our moods and emotions by smell and facial expressions. They can also be trained to react to certain Word sounds such as their name, ride, biscuit, sit etc. They can only understand the Words in the human language that they have been trained to. If you have a conversation with your dog about how your day went they are not going to know what you're talking about. They will be able to tell if you are happy or upset.