Understanding print involves recognizing and understanding the mechanics of text. A reader must understand that text contains a message; that it flows from left to right and from top to bottom; that individual words on the page correspond to individual spoken words, and so on. Written English has a structure, and understanding that structure is prerequisite to good decoding skills.
Again, a children's writing is a good way to reveal their understanding of the mechanics of text. Even children that are not writing well-formed letters can reveal what they know about print - very young children who have some experience with text "write" starting at the top, left corner of the page, writing in parallel, horizontal lines from left to right, and from the top of the page to the bottom of the page. The "words" the child forms are separated by spaces, and may even contain letter-like symbols. Sometimes children even insert some attempts at punctuation into their creations.
A teacher can also observe how the child handles a book, and can assess the child's knowledge about how information is presented in the book. A teacher can determine the child's general knowledge of books (Does the child know where the cover is? Does the child hold the book right-side-up? Does the child turn the pages appropriately? Does the child know that the message of the book is contained in the text?), and the teacher can gather knowledge about more specific details (Does the child have one-to-one correspondence between printed words and spoken words? Does the child know what a sentence is and what punctuation is? Can the child identify capital letters and lower-case letters?).