Is prepper a word that an average English speaking person understands (and also uses)?
No, prepper is not common English (my spellchecker marks it as wrong) and out of context most English speakers would not understand it: potential meanings might include someone attending a preparatory school (more commonly preppy) or somebody preparing others for an exam (more commonly crammer or private tutor).
Apparently it is used to mean a kind of survivalist, as in this recent Reuters' article which says
Tegeler is among a growing subculture of Americans who refer to themselves informally as "preppers." Some are driven by a fear of imminent societal collapse, others are worried about terrorism, and many have a vague concern that an escalating series of natural disasters is leading to some type of environmental cataclysm.
So prepper is slang from a subculture, and not widely used outside that subculture.
I suppose that a prepper is somebody who preps (i.e., prepares) for something, perhaps a test. If it were used in a clear context, I expect many English speakers would understand it, but I don't know how we would discover that without doing an experiment. As for the question of whether the average English speaker uses it, it doesn't appear at all in the Corpus of Contemporary American English, so I think it's safe to say that it is not at all commonly used.
The word seems to be an informal term; OneLook only finds the noun prepper in two sources: Wikipedia, and the Urban Dictionary; meanwhile, the verb form prep is widely recognized in over 40 references.
That said, the OED does list it as a slang term, with a reference stretching back almost 90 years:
prepper, n. (slang) A student at a prep school, esp. one who is a member of a sports team.
1922 Woodland (Calif.) Daily Democrat 29 Nov. 8/3 The ‘preppers’ are out to show the Carlton Club boys that they are just the niftiest bunch of school footballers in the valley.
2004 Dayton (Ohio) Daily News (Nexis) 27 May As a prepper, the 5-foot-6 Flaute once dominated the Mid-Miami League's 3,200-meters, taking three championships.
After reading this discussion, though, I've concluded that preppers can prepare for anything: supper, surgery, exams – or even an impending apocalypse.