I believe they know and sense all sorts of things we miss. Dogs still trust their intutition, whereas most people have been taught to ignore theirs.

Preacher is my most protective dog. When I am home alone, if someone comes to the house, he follows me everywhere I go--even if the person is doing something in the yard, like checking the electicity meter. Preacher has bitten twice (not major attacks, just nailed their hands.) . Both times he bit "friends" of my husband who I think are both scummy. He's a good judge of character. He didn't get punished either time!