One view (and the view I hold to) of the Genesis account in Gen 1:1-2:3 indicates that God created a fully functioning creation at the end of seven days, with the earth, plants, animals, heavenly bodies, and mankind all formed to function as an interrelated whole like God intended.
Genesis 2:4-25 is an expanded history of what is stated to have transpired in 1:1-2:3. Adam, the initial man of mankind, was formed differently than other creatures, being both made from what was already created, the dust of the ground (2:7a), and God's breathing into him (2:7b), giving him a distinct form of life.
This distinct form apparently included language. In both the initial summary account of creation in chapter 1 and the expanded details in chapter 2, God speaks to man directly (NKJV quoted):
- 16 And the LORD God commanded the man, saying, “Of every tree of the garden you may freely eat; 17 but of the tree of the knowledge of good and evil you shall not eat, for in the day that you eat of it you shall surely die.” (Genesis 2:16-17)
- 28 Then God blessed them, and God said to them, “Be fruitful and multiply; fill the earth and subdue it; have dominion over the fish of the sea, over the birds of the air, and over every living thing that moves on the earth.”
29 And God said, “See, I have given you every herb that yields seed which is on the face of all the earth, and every tree whose fruit yields seed; to you it shall be for food. 30 Also, to every beast of the earth, to every bird of the air, and to everything that creeps on the earth, in which there is life, I have given every green herb for food”; and it was so. (Genesis 1:28-30)
I've placed the 2:16-17 passage first, because I believe it was spoken before Eve's creation, taking chapter 2 chronologically. However, in both cases, we see that God simply speaks to Adam (and then both), indicating part of the "fully functioning" of Adam was speech capability, with the ability to know what is being said.
Adam, as well, had the ability to use his speech capabilities to expand his own vocabulary, for God allowed him to name the animals (Gen 2:19-20).
So the narrative implies fully functioning speech capabilities, along with understanding of what is being said. Not just understanding of the word "death," but every other word used by God as well in His communication to Adam.
The blessing of language is that one can learn about a subject without ever having experienced that subject. I do not need to have walked on or even seen a planet in our solar system to understand the concepts related to it that others have experienced and communicated to me through language. Nor do I need to take narcotics to know about them and their consequences that I have learned through language.
So Adam can well have known what "death" meant without having experienced it, given that God knew Adam knew what He was saying to him, and God made Adam to be able to communicate. Language was apparently part of the special creation of mankind as being made "like" God (Gen 1:26). This is assumed within the narrative itself.
The concept of what "death" was had been given to Adam along with whatever other concepts of language were needed for God to communicate with His creature made in His likeness.