That's like asking how a lock "understands" a key. Each binary code (there are only 65,635 possibilities in a computer that uses 16 bit opcodes) is a set of on and off states - 16 of them. Those states cause the computer to do something. (It's like turning on certain LEDs in your monitor - how can one monitor "understand" every single language, and know every single picture, in the world?) The CPU (that's what reads the codes) does what the code calls for, because the code turned certain switches on (the 1s) and certain other ones off (the 0s). Maybe it calls for the computer to load the next 3 sets of binary codes, or to start running the code from a different place in memory, or put a certain code pattern out to the screen. That's what it does.