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The phrase "understood that way" is correct and usable in written English.
It is typically used when describing how something is interpreted or perceived by someone. For example: - "Her words could be understood that way, but I think she meant something else." - "The painting can be understood that way, but the artist had a different intention." - "His actions could easily be understood that way, but there may be underlying motivations we are not aware of."
Exact(9)
When a suicide can be understood that way, survivors may feel relieved of much of their what-if guilt.
After publication, Snouber Sharif pointed out that she knew the woman she addressed, did not intend to speak aggressively and would not have been understood that way by the woman.
But Tuck gave me the faith that aging could be understood that way".
We each communicate in English because we think we'll be understood that way given everyone else communicates that way, and we want to be understood.
Some argue that none is etymologically equivalent to not one and thus must be understood that way.
It will be no surprise if someone who tries to develop a clear-headed external reasons theory turns out not to be definitely an external reasons theorist: thus for example John McDowell's theory in WME Essay 5, even though it is explicitly presented as an example of external reasons theory, is probably not best understood that way.
Similar(51)
And she understood that the way to navigate star-infested waters was to avoid making waves.
In the end, I grudgingly admired her fortitude and understood that her way was not mine.
"He understood that the way to get the best valuation was to run the most transparent company".
We understood that the way to greatness was not to ape Intel but to differentiate our solution.
Even George W. Bush understood that the way to get through to Putin is through respect.
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Since I tried Ludwig back in 2017, I have been constantly using it in both editing and translation. Ever since, I suggest it to my translators at ProSciEditing.

Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com