'Exposure to language' it's called and it's just one of many methods to learn a language. For many people it won't work just because many of us don't like this feeling when you don't understand sth. that's why this works well for children - they are absolutely fine about not understanding and not knowing things, they take it easy and so learn quickly. But they learn in a totally different way, they just repeat what they hear whithout understanding why they say this or that. We, adults, learn differently - we have to understand patterns, see the logic, make analogies, etc.

You don't need to live with the native people though that's a great help. The key point is to repeat many time, listen, and try to communicate with the little words you have in mind.

over time,when you live with people who speak another language you will begin to understand them