Peace cannot be kept by force; it can only be achieved by understanding.
If two people (or two countries) don’t understand one another, there can't be a peace. There will be misunderstandings leading to friction, which leads to arguments which will eventually lead to conflict.
If they don’t understand each other’s values there is little chance for effective communication. Without effective communication, there is no way to avoid the eventual problems, and ineffective communication is likely to only exasperate them.
Enforcement of one’s will by force of arms might suppress resistance of the other for a short period, but there will always be a return to conflict. The cycle will continue until an understanding is achieved.
Understanding does not mean agreement. You can understand someone, their comments and their motivations and still disagree with them. As an example, most would find the basics of Hitler’s comments and motivations fairly clear and understandable, and most people would disagree with them.
The trick with this quote is that the understanding must be bidirectional for there to be peace.
If you can understand the others, you can put yourself in their shoes and understand how they interpret your actions. Then, hopefully, you can explain yourself in a manner that they can better understand. They can then start to understand you.
However, understanding has always been a two-edged sword. There are always will be evil people in the world. People who will take their understanding of you and use it to their advantage and your disadvantage.
That said, I would still argue that more good can be done by being honest and open.
Where do you have conflict in your life? Is it someone who you don’t understand, or someone you understand too well? Or is it vice versa?