Of course they do. Just look at the assistance dogs. Understand 100's commands. They also understand moods on a non-verbal level.
More important is for more people to learn to speak dog. Understand their body language. The other day i moved quickly to get my dog away from another as the other dog was standing in a very dominant position ( head over my dogs shoulders) and you could see my dog did not like it. The other dog owners had no idea how the communication was going.
Not that my dog has ever taken the first step but he will growl and bare his teeth and that can lead to escalation.
