While he was developing case-based reasoning Roger Schank argued that "he understands Burger King in the sense of being able to operate in it....he says Oh I see, Burger King is just like McDonalds" "Understanding means being reminded of the closest previously experienced phenomenon." ( Dynamic Memory, R. C. Schank, Cambridge U. Press, 1982, pg 24)
Asa H is a hierarchically organized network of case bases. This network stores the various spatial and temporal patterns of sensory input and output actions that Asa has encountered. When Asa experiences a new input pattern it understands that new pattern if the similarity measures that are generated (at all levels in the hierarchy) exceed some reasonable values. Asa understands what it is experiencing to that degree. To the degree of the similarity match.
Understanding is a more complex thing in that it may involve similarity matches on a number of levels in the knowledge hierarchy.