I think it's a mistake to disentangle their abilities from understanding. Just swallow the pill that they have some form of understanding, even if it slightly differs from ours. I really don't see the problem.

I prefer to work the other way around. That is, accept that a lot of human speech (and text) is generated via similar mechanisms to the ones that drive LLMs, but note that there is another kind of behavior - reasoning - which seems to be distinct.