Here's how to tell the difference:
Action Verb: When "understood" describes a mental action, it is an action verb.
* Example: "She understood the instructions." (She performed the action of understanding)
Linking Verb: When "understood" connects the subject to a state of being or a characteristic, it is a linking verb.
* Example: "He understood that he was wrong." (The verb links the subject "he" to the state of being "wrong").
Key point: If you can replace "understood" with "was" or "became" and the sentence still makes sense, it's likely a linking verb.