It means that there are people who understand binary and those that do not understand it. That is, binary is said to be the way that computers are known to express numbers.
What is the joke about?
This is known to be a popular joke that is often used by people who are known to be great savvy in the field of mathematics.
The joke is known to be one that makes the point that a person is implying that the phrase is about those who only understands the decimal system, and thus relies on numbers in groups of 10.
The binary system is one that relies on numbers that are known to be in groups of 2.
Therefore, If the speaker of the above phrase is one who is able to understand binary, that person would be able to say that that the phrase is correctly written as "there are 2 types of people that understand binary".
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