Sort of. It will try to understand you even if you get the grammar wrong (a bit like a human would), but if it really has no clue what you're trying to say, it will ask you to repeat. I think it's best that way as it mimics learning in real life. If you keep getting your point across, over time, your grammar will slowly improve. The only evidence I have for this is anecdotal from learning Romanian with it myself.
One followup: does it take into account grammatical errors, incorrect conjugations and that kind of thing?