To interpret is to give or provide the meaning of something, or to construe or understand something in a particular way.

Does interpretation mean understanding?

That's up for interpretation. Interpretation is the act of explaining, reframing, or otherwise showing your own understanding of something. A person who translates one language into another is called an interpreter because they are explaining what a person is saying to someone who doesn't understand.

Is interpret and understand the same thing?

'Understand' and 'interpret' can mean the same thing, but often there is a subtle distinction. 'To understand' is what you think it means; 'to interpret' is to be able to draw conclusions from a concept which you understand.