I had an interesting experience the other day. Jim and I rented a suspense/horror movie from the local video store and, of course, as soon as we sat down the cats climbed onto our laps to cuddle with us (Howard on Jim's lap, Luna on mine). Luna was sitting on my lap, facing the TV with both front paws resting on my knee, but I didn't think she was really paying attention to the action going on on the screen,
Then about halfway through the movie, there came a scene where an evil creature was chasing a girl down a long hallway and she was trying to make it to a doorway at the very end so she could escape (typical horror movie). Just as the creature was about to catch up with the girl and eat her, Luna tensed up and dug both sets of front claws into my knee . When the girl made it to safety after a very narrow miss, Luna released her claws and relaxed. Then she jumped off my lap, looked back at both of us, and shook herself off...almost as if to say "How can you guys watch this stuff???" What's more, after the movie she was even more than usual demanding of attention and someone for company.
So I think she was actually paying attention to the movie! Maybe even had some understanding of what was going on with the plot!