Why 'Wir nicht verstehen.' is not right.
The verb has to be in second position in main clauses. ‘Wir’ here occupies the first position, so the first word after that has to be the verb, ‘verstehen’; ‘nicht’ can only come after that.
Why it doesn't use "es"?
I can't understand what is that.
Because there is no "it" in this sentence.