What is it you do not comprehend about the usage of the phrase "I understand"?

I am generally a pretty pleasant guy to be around at work, but I do admit that I can be a bit difficult sometimes when I am dealing with the regional head office and their business culture. Since quite a way back I have a pretty well developed allergy to overuse of business jargon and people who believe that "professionalism" means acting and dressing in a certain way without thinking about performance.

In Japan, there is very little use of English business jargon and the atmosphere is pretty relaxed with very few people putting up a facade of fake professionalism, so thankfully I am not very exposed to this source of allergy here in Japan.

Recently I participated in a marketing meeting involving a manager from the Hong Kong office regarding some of the ongoing initiatives. The guy is a really nice guy but throws a little too much jargon around and has this habit of saying "I understand" all the time. Also, he kept asking misdirected questions to which I did my best in explaining and he kept saying "I understand" just before launching into a follow up question that showed that he hadn't really understood at all what we were trying to tell him.

At one point I launched into an explanation, trying to explain something very difficult about the Japanese distribution system in a few sentences and just at the moment I had finished talking I realized that what I just said was completely incomprehensible and I finished with a lame "can you maybe get an idea at all with what I'm getting at here...?", to which, after a few seconds silence came a "I understand".

I have this nagging feeling that this guy hasn't really comprehended the meaning and proper usage of the phrase "I understand", but I'll be damned if I know how to explain it to him...