“sense.” The Hebrew word is leb (#03820 לֵב), which is often translated “heart,” but this is one of those cases where that translation would cause confusion. In modern English, the word “heart” usually refers to emotion or passion, but that is not its meaning here. The function of the brain was unknown in biblical times, so things that we generally assign to the brain, like thinking, attitudes, understanding, and good sense, were assigned to the heart. In this case, a person who does not take the time to figure out how to live in peace with his neighbors lacks good sense. People did not move very much in biblical times, so a person was likely to have the same neighbors his entire life, and would often need their help in difficult times (cp. Prov. 12:26; 27:10; Luke 11:5-8). It was foolish to not learn to get along with them.
[For more on the Hebrew word leb and “heart,” see commentary on Prov. 15:21, “sense.”]
“understanding.” The Hebrew text is plural, “understandings.” This is most likely a plural of emphasis, and indicates “great understanding.”