They most certainly understand.
Words and phrases in my house are:
1. Time for bed
2. NO
3. GO (move so I don’t trip on you)
4. I'm eating (they all clear the area)
5. My chair (same as I’m eating)
6. Snuggle
7. Hugs
8. Kisses
9. Mine
10.Be nice (if not you get wet)
11. Nails (making bread)
12. Loving