Nobody can understand that people are smarter than them, at least to any degree. The ability to tell that somebody is smarter than you... requires that you be smarter than them, and thus by proxy that you be smarter than yourself.
I honestly believe that everybody thinks though are roughly the smartest person on the planet. They may be tied for first with 5 billion other folks, but they are totally right up there. I personally can't gauge how much smarter a person is than me, but I can tell you how stupid they are in exacting detail. I can rank the less intelligent with absolute precision, but for the more intelligent... eh, they seem on par with me.
Intelligence is, in part, the ability to gauge intelligence.