Understand queen's wearing crown lined with fine fabric (9)
I believe the answer is:
penetrate
'understand' is the definition.
(penetrating is a kind of understanding)
'queen's wearing crown lined with fine fabric' is the wordplay.
'queen' becomes 'ER' (short for Elizabeth Regina ie Queen Elizabeth).
'wearing' means one lot of letters goes inside another.
'crown' becomes 'pate' (both can mean a person's head).
'lined with' indicates putting letters inside (as in being filled or lined with something).
'fine fabric' becomes 'net' (as in net curtains).
'er' inserted inside 'pate' is 'perate'.
'perate' placed around 'net' is 'PENETRATE'.
(Other definitions for penetrate that I've seen before include "Force way through, into" , "Go through" , "probe" , "Run through" , "Pass into or through" .)