They’re mostly imitating when they hear. Think of them as toddlers learning to speak. If you show a toddler a picture of a cow, they might recognize it and say “cow”, but if you ask them “Where does milk come from”, they wouldn’t know that.
Of course if you follow up your question by holding a picture of a cow up, then toddlers will learn milk question = cow answer. But it’s not so much understanding that milk comes from cows, but more so you asked them this question and you rewarded them for that answer.
So yeah, parrots can also learn the same thing. Let’s say you tell your wife “I love you” and she makes kissy noises in responses to that. A parrot can understand that a response to “I love you” is kissy noises, but they wouldn’t understand the meaning behind why you’re even making kissy noises in the first place. Or heck they might even go around saying “I love you *kissy noises*” on their own, because they learn that those two tend to go together.
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