Yeah, Chris is right. I would also say "I can't understand," or "I can't understand you" if we were on the phone and I could not really hear you. I could also say "I can't understand you," if you said something really crazy or if you made a choice I disagreed with.

Well, to me, the difference is "I don't understand" generally means someone is willing to hear another explanation so they are able to understand it. So, basically they feel like they could understand it with time, just they don't at the moment. "I can't understand" is like if someone feels there is no way they will ever understand it. As if they don't have the ability to understand. But they are fairly similar. So, it might take a bit of time to understand the subtle difference.