Is it true that babies understand everything?

I wouldn't say they would understand concepts of gravity and black holes :) :) but if you have been consistently talking to your kid and repeating the same things over and over again, it's safe to assume that after a while, they learn and understand daily things. For example, if your baby has an apple everyday and every time you get the apple, you point at it and say "we are going to have an apple", it should not come to you as a surprise if they look at it one day and say "that is an apple". Keep reinforcing the same things and they do understand what they mean. Babies learning language is a whole different science. There are a lot of interesting documentaries on how babies learn. For the time being, here's a short video (https://www.youtube.com/watch?v=HBW5vdhr_PA) that shows babies can distinguish right from wrong :)