The Mishna in Megillah (2:1) states:
והלועז ששמע אשורית יצא
A foreigner who heard [it] in Hebrew fulfills his obligation.
The Talmud (18a) elaborates:
והלועז ששמע אשורית יצא וכו', - והא לא ידע מאי קאמרי? - מידי דהוה אנשים ועמי הארץ. - מתקיף לה רבינא: אטו אנן האחשתרנים בני הרמכים, מי ידעינן? אלא מצות קריאה ופרסומי ניסא - הכא נמי מצות קריאה ופרסומי ניסא.
A foreigner who heard [it] in Hebrew has fulfilled his obligation - But he doesn't know what they are saying! Since he is like women and the unlearned. Ravina challenged this: do [even] we know the meaning "ahashtranim b'nei haramakhim'(Ester 8:10)? Rather the mitsvah is to read and publicise, so too here, the mitsvah is to read and publicise it.
The Talmud pretty clearly affirms the implication of the Mishna that one hearing the Megillah in Hebrew need not understand it.
This law is codified by Rambam (Hilkhot Megillah 2:3):
הלועז ששמע את המגילה הכתובה בלשון הקודש, ובכתב הקודש--אף על פי שאינו יודע מה הן אומרין, יצא ידי חובתו
A foreigner who heard the Megillah written in the Hebrew language and the Hebrew alphabet--even though he doesn't know what they are saying, he fulfills his obligation.
It is also codified by the Tur (OH 690) and the Shulhan Arukh (OH 690:8).
In summary
One does not need to understand the Megillah reading in order to fulfill his obligation if he hears it read in Hebrew.