Understands currents around old lake (7)
I believe the answer is:
follows
'understands' is the definition.
'currents around old lake' is the wordplay.
'currents' becomes 'flows' ('flow' can be a synonym of 'current').
'around' means one lot of letters goes inside another.
'old' becomes 'o' (abbreviation).
'lake' becomes 'L' (geographical abbreviation).
'o'+'l'='ol'
'flows' placed around 'ol' is 'FOLLOWS'.
(Other definitions for follows that I've seen before include "Goes or comes after" , "Pursues" .)