I suspect if you were to ask someone from the Pokémon universe, they would respond that this is one of the ‘wondrous mysteries of Pokémon’ which Professor Oak and his ilk are doing such a rubbish job of pursuing.
The anime certainly seems to imply that they understand human speech; people regularly talk to Pokémon, and the Pokémon seem to react appropriately to the words they’re hearing, even wild Pokémon who’ve had no previous exposure to English, or Japanese, or whatever language these people supposedly use. You could argue that Pokémon have adapted to be able to respond effectively to human orders since it allows them to work with humans more efficiently, but their comprehension seems to go beyond that; Ash regularly talks to his Pokémon about subjects that go well beyond simple tactical commands, and they clearly understand him. On the other hand, when Meowth first attempts to learn human speech in Go West, Young Meowth and tries to read words out of a book, it’s clear that he doesn’t initially understand the meaning of what he’s saying – he just knows they’re words used by humans.
I think the key to making sense of this is that Pokémon can understand each other as well, and can communicate relatively complex information between different species despite having very few phonemes to work with and almost nonexistent syntax. Clearly the actual sounds involved in communication are of secondary importance to them; they’re receiving and understanding something else. I think Pokémon are capable of this kind of universal comprehension because they’re excellent at interpreting nonverbal cues – things like gestures, posture, tone, and eye movement. When Pokémon speak to each other, this is how they get most of their meaning across. The actual vocalisations are used mainly for emphasis. Likewise, when they listen to humans, they’re not actually listening to the words – they’re listening for shifts in tone and inflection, watching your eyes and the way you hold your weight, and so on. Because this is how they communicate all the time, they’re extremely good at it. The kind of conversation Ash most often has with his Pokémon – conversations about emotions and relationships – are very easy for them to understand. Learning to recognise specific attack commands is a little harder, though distinguishing between ‘attack,’ ‘defend,’ and ‘dodge’ is basic. Creating complex strategies in advance is difficult at first, but gets easier as the relationship between a trainer and a Pokémon develops. Making heavy use of gestures can make this much easier. Many, perhaps most Pokémon are intelligent enough to understand any concept you could possibly want to explain to them, but getting the message across may be difficult for more complex ideas.
Pokémaniacal 