It doesn't need to understand the words to perform logic because the logic was already performed by humans who encoded their knowledge into words. It's not reasoning, but the reasoning was already done by humans. It's not perfect of course since it's still based on probability, but the fact that it can pull the correct sequence of words to exhibit logic is incredibly powerful. The main hard part of working with LLMs is that they break randomly, so harnessing their power will be a matter of programming in multiple levels of safe guards.