They don't understand anything, but they sure can repeat a pattern.
I'm using Claude Code to work on something involving a declarative UI DSL that wraps a very imperative API. Its first pass at adding a new component required imperative management of that component's state. Without that implementation in context, I told Claude the imperative pattern "sucks" and asked for an improvement just to see how far that would get me.
A human developer familiar with the codebase would easily understand the problem and add some basic state management to the DSL's support for that component. I won't pretend Claude understood, but it matched the pattern and generated the result I wanted.
This does suggest to me that a language spec and a handful of samples is enough to get it to produce useful results.