“knew.” This is the common word for “know” in Hebrew, yada (#03045 ידע), but in this case, it is being used in a full sense of both knowing and knowing the implications. It is not being used for simple intellectual knowledge, as if Adam and Eve were nude before but were somehow ignorant of it. They now knew all the implications of their nakedness, including the sin that had opened their eyes to their being naked, and so they were afraid and ashamed (Gen. 3:10).
“naked.” The Hebrew root word is arvm, a homonym, and it can mean “naked” or “crafty.” Adam and Eve were naked [arvm] in the Garden (Gen. 2:25), when the “crafty” [arvm] serpent came to them (Gen. 3:1). They disobeyed God and sinned, and knew they were arvm, but here in Genesis 3:7, should arvm be understood as “naked” or “crafty?” Actually, both, and the original unpointed Hebrew word can mean both. They knew they were naked (arvm), so they made fig-leaf coverings. If nakedness was their only problem, those coverings would have taken care of the problem, but it didn’t because Adam and Eve had also become arvm, “crafty,” and so they were also afraid and ashamed, which is why they hid from God—and their inner craftiness and serpent nature was a problem that would be with them until they died. Genesis 3 then goes on to show how both men and women are crafty, and how that shows up in human life. Adam blamed God for giving him Eve (Gen. 3:12), and Eve blamed the serpent when it was her own desire that caused her to sin (Gen. 3:13). After being ejected from the Garden of Eden, mankind continued to show its crafty nature—a nature that without God’s intervention, ends in everlasting death for each human. Paul wrote: “Wretched man that I am! Who will rescue me out of this body of death? Thanks be to God through Jesus Christ our Lord! (Rom. 7:24-25). Jesus Christ is the way to everlasting life.
[For more on Adam and Eve being naked and now naked and crafty, see commentary on Gen. 3:1. For more on the sin nature that lives in mankind, see commentary on Rom. 7:17.]