How much of what we say to them do dogs understand? I find myself thinking about this a lot these days, as I teach both a canine language class and a class that looks at influential dog trainers in history (all of whom had definite ideas about what dogs do, or, mostly, do not understand).
Konrad Most, an early trainer whose teachings influenced the training of military and police dogs well into the mid-1900s, believed that dogs did not, could not comprehend words. Rather than describe the verbal cues given to dogs as “commands,” Most called them “utterances,” so as to avoid any chance of ascribing any comprehension abilities to the dog.

At the other extreme was celebrity-animal trainer Frank Inn, who, in the 1970s, taught Benji using a conversational style consisting of full sentences.
Nearly everyone who has dogs talks to them. Some babble and speak in baby talk, others order their dogs around brusquely, but many of us chat to our dogs as if talking to a friend, despite their lack of verbal response. We often swear that they understand every word.

Do they?

Dogs are less focused on words than humans are, but they can certainly learn to associate certain actions with words and phrases and respond to verbal requests. They can learn the names of large numbers of items. However much they are understanding of our overall meaning, they appear to be good listeners, looking at us attentively and at least seeming interested.
Dogs are more visual than we are; they learn hand signals and understand other body language cues even more quickly than they build associations with our words. This can get us into trouble sometimes.
Konrad Most might have been the first trainer to write a description of creating unintended associations. His example was a handler who was teaching a dog a “down stay.” The handler would walk away from the dog (who was remaining, lying down, in place). On reaching the desired distance, the handler would turn to face the dog and immediately release the dog from the down stay. Well, very quickly, the cue to the dog would become — not the release word —the handler’s  turn. That is what Most meant by unintended associations. Nearly all novice trainers learn this lesson through personal experience, unconsciously repeating a movement when giving a particular verbal cue and creating a strong association in the dog’s mind.
Dogs are simply outstanding readers of human body language. They out-perform wolves and even other primates at following the direction of our gaze or interpreting a pointing finger. And dogs’ ability to read us goes beyond the signals we give them — intentionally or not — when we’re asking them to do something.
Very often, they will respond to things we don’t know that we’ve “said.” For example, if our body language tells them that we had a hard day or we’re feeling sad, lots of dogs will offer a cuddle, a lick, a favorite toy. Empathy. If our hand tenses up on the leash or some other cue tells them that we’re nervous or afraid of something — or someone — they might bark or growl at the scary person or thing. I’ve seen service dogs begin to intuit what their new human partners need or want after only a few days on the job.
Konrad Most, like many trainers of his day, didn’t credit dogs with the ability to think or learn concepts. He used training methods that today would be understood to be cruel to dogs. For all his faults, though, he understood dogs’ ability to read our body language. Now, if only we were as good at understanding what our dogs are saying to us!