Not very much, is the shortest answer.

The longer answer is that it's hard to tell, but we can assume that what they knew was precious little. In late antique and medieval history, poor men tell no tales--and the vast and overwhelming majority of society was poor. Likewise, elites don't talk about the poor very often, and when they do it's in broad strokes that always working some kind of angle (see, for example, Gregory of Tours' sixth-century discussion of the poor at St Martin's shrine in his "History of the Franks"; or for a whinier version, see Gildas the Wise on the reasons why the Welsh were doomed to failure and conquest in his "De excidio").

In general, even the nicest reading of people like Gregory and Gildas suggest that the early medieval laity barely clung to nominal Christianity, and were very easily swayed by whatever religious practice was offering results. They were never really ardent lovers of Christianity. They just followed the cultural expressions and fads that were popular among and/or required by elites. After the collapse of the Roman empire, a lot of actual power was vested into the Church, and so the people gravitated to Christianity because it became the symbolic seat of law, order, culture, education, etc. It wasn't because they were swayed by the tenets of Christian faith, or that they understood Church doctrine. Rather, the rise of Christianity was due to myriad extra-religious, profane forces acting on society.

So, while it varies from place to place (of course), your average late antique or early medieval Christian knew only a handful of things about their faith. They knew that Christ lived and died, and that He was resurrected (they'd be fuzzy on the details of how that worked, however). They knew that God ran the universe, and that the Bible (well, whatever parts they knew existed in their region) was a divinely inspired account of the interaction between God and mankind. They knew they were imperfect, because they were alive; and they knew that it was impossible to be perfect in this life (only one guy pulled that off, and that was Jesus). They knew that there was an afterlife, and that believing in God was a way to get to that afterlife. They knew that monks and priests knew more than they did, and that because of their education the clergy were on the border between the material world and the immaterial sacred world. And they knew that sometimes, God allowed miracles to happen, either through His agents (clerics, Saints, martyrs, etc) or by chance. They saw those miracles, and they knew they happened.

As far as what they misunderstood, I'd venture to say the laity misunderstood MOST of Catholicism. There was disagreement on whether or not Christ was divine or human (officially, He's both). People didn't know if celibacy was really really required among priests, and whether or not the prohibitions only applied to clerical marriage. The laity was unclear as to whether or not they were supposed to keep the mosaic (Old Testament) laws too, or if that was just for Jews. I mean they misunderstood everything--and for the most part, I'd say they didn't care either. Orthodoxy wasn't a pressing concern, and until they were chided by a priest or bishop for continuing their quaint, pagan customs; these issues weren't on their radar at all.

This answer from a couple weeks ago has further information: I'm an illiterate medieval farm hand. What is my understanding of the contents of the bible if church services are conducted in Latin?