Acharya Prashant explains that there is a vast difference between thinking and understanding. Thinking is a mechanical process rooted in the past and memory, where the mind simply recalls stored images and information. This process is instrumental and lacks true intelligence, much like a computer's hard drive. In contrast, understanding is the root of intelligence and occurs only in an environment of complete stillness and attention. It is an instantaneous process that happens when the mind is quiet and free from the noise of thoughts and associations.