- It is clear that [what was done as a public health measure to protect people from the COVID-19 threat] has snowballed into a major economic crisis for the urban poor general.
In this sentence, 'It' = that . . . . . . poor general.
Here, the that-clause is in apposition to the pronoun 'It'. So, the that-clause is a nominal appositive clause.
The bracketed part is the subject of the verb phrase "has snowballed".
So, this sentence is grammatical.
- I didn't understand [what the government's intention was behind this scenario].
Here, the indirect question [the bracketed part] is the object of the verb "understand". So this is also a nominal clause as an object of a finite verb.
So, this sentence is grammatical.
- I didn't understand that what is the government's intention behind this scenario.
What means 'that which'. In this sentence, 'that' should be omitted. The what-clause is a subordinate nominal clause. So it should be an indirect question. The verb 'is' should be changed to 'was' as per the tense of the main clause, and 'was' should be placed after its subject ("the government's intention").
So, this sentence is ungrammatical.