Understand is a stative verb along with like, remember, think, want, etc. that is not normally used in the progressive form. This is why "I'm not understanding" is much less common than "I don't understand". However, as Huddleston in The Cambridge Grammar of the English Language (p170) states:
None of these (stative) verbs completely excludes the progressive. … The
progressive adds an element of tentativeness. … It is not so clear how
the politeness derives from the progressive. One factor is no doubt
length/complexity: polite formulations are often more complex than
The use of the progressive in the case of "I'm not understanding you" may also be interpreted here as implying that the failure to understand is a temporary state for which I, not you, bear the responsibility.
There is an extensive analysis of the various functions of the progressive (including tentativeness, politeness, deference, etc.) in Levin: The progressive verb in modern American English. Here is one extract:
… the progressive is used as a device that reduces imposition on the