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I usually see this in non-English speaking countries. Examples:

The park is closed for maintenance. Thanks for understanding.

I'm currently out of office, please address my backup. Thank you for understanding.

Now I know what they mean: "Thank you for understanding my situation and sorry for your inconvenience."

But is this phrase proper English? Would anyone understand it?

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It seems unremarkable to me. One dictionary definition of "understand" is "to accept tolerantly or sympathetically". The reader is presumed to do this and is being thanked in advanced for having done so.

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