Everyone understood air raid warden's signal (3,5)
I believe the answer is:
all clear
'signal' is the definition.
(all clear is a kind of signal)
'everyone understood air raid warden's' is the wordplay.
I cannot quite understand how this works, but
'everyone' could be 'all' (all people) and 'all' is present in the answer.
'understood' could be 'clear' (is that clear?) and 'clear' is found in the answer.
This accounts for all the letters.
This explanation may well be incorrect...
Can you help me to learn more?
(Other definitions for all clear that I've seen before include "without any ambiguity" , "Siren sound to mark end of bombing by planes" , "Encouraging signal" , "welcome sound" , "no further questions needed" .)