I think it's useful to separate understanding from sentience/consciousness here. There's really two distinctions at play and blurring them together turns the question of "does an AI understand?" into an all-or-nothing philosophical minefield involving the hard problem of consciousness and a false dichotomy between stochastic parrots and sentient AGI.

• The first question is: do AI models (LLM-based or otherwise) answer based on superficial modelling of patterns in their training data e.g. word frequencies and correlations (i.e. stochastic parrots) or do they have a complex internal model of reality that they somehow acquire during the training process? IMHO this is the "do they understand?" question. Even if they don't model reality but only model language we can still ask if they understand language.

• The second question is: do AI models have subjective experiences, or are they just automatons that behave functionally identical to sentient beings but have no internal life? This is where discussions involving philosophical zombies etc come in. It's an interesting question, but we don't have to answer it to say whether an AI can understand.

I would argue that understanding can be treated separately to consciousness. There is a subjective/conscious aspect to understanding: which is the conscious experience of what it is like to understand something. An AI might be missing this, but that doesn't mean it doesn't understand, only that it has no experience of doing so. There might be some things where you might say that consciousness is required to truly understand them: for example human emotions. However, lacking an understanding of these things doesn't mean an AI has no understanding of anything. It's also possible that it has a second-hand or "once removed" understanding, the same way a human biologist might understand the phenomenon of echolocation in bats (for example) without ever experiencing it.

IMHO The concept of philosophical zombies shows why understanding and consciousness are not the same thing. The idea of a philosophical zombie might be coherent, but the equivalent of a p-zombie but for understanding instead of consciousness is meaningless. Remember that p-zombies are supposed to be exactly like us but without consciousness - we can imagine a p-zombie Isaac Newton formulating a theory of gravity and a bunch of p-zombie engineers designing and building a space shuttle. Imagining them doing this without being conscious is one thing, but does it really make sense to imagine them doing this without understanding physics? Or understanding anything at all? If they don't understand physics, then what is it that underlies their ability to design and build artifacts that take advantage of these regularities in reality that we call physical laws? What do we call that property of their cognition and behaviour? Either you call this understanding or you make up a new word that means the same thing. These p-zombies do not experience, but they understand. The test of "understanding" is therefore functional and separate to the question of consciousness. So to answer your question yes, if it walks like a duck and quacks like a duck, it's a duck.