English prepositions tend to have a wide variety of meanings, and this is particularly true of old prepositions like by, which came to the language from Old English, giving the word over one thousand years to gather meanings. The OED finds 39 major categories of meaning for the preposition by, classified into seven classes of usage. The one that's relevant here is in class V: "medium, means, instrumentality, agency", category 29: "After verbs of knowing, perceiving, calling, etc.", subcategory b: "In understand by, mean by".
Which is to say that in
by the term 'knowledge a priori'... we understand....
the term knowledge a priori is the label to be given to the concept that follows. (In this case, that's the kind of knowledge that's the opposite of empirical knowledge, the kind gained through experience). By here tell us that when we encounter the term, we're to understand it refers to the concept.