This phrase can be used when communicating with upset customers. This is an important stage: you join the client in their strife. Without that, you can't proceed to a constructive solution. Empathy first.
The most important thing here is not just to throw out a standard "I understand you," but to describe the specific situation in simple words, sincerely and personally.
For example, I recently didn't get my dresses from the dry cleaners on time. When I moaned about what I was going to wear on my date, the person replied, "Oh, I understand, your evening plans could be ruined! We'll think of something."
Use fresh, sincere language, adding context to the situation. Take inspiration from this article
Avoid phrases like "I understand that you are uncomfortable," which usually sounds like "Calm down, man, shit happens."