From The Concise Oxford Dictionary of World Religions 1997,
by Oxford University Press 1997:
Ñāṇadassana (‘knowledge and insight’). Buddhist knowledge as an act of ‘seeing’. Dassana indicates ‘seeing or sight’. When combined with ñāṇa it gives the special meaning, ‘insight arising from knowledge’. Thus the Buddha is described as one who ‘knows and sees’ (tam ahaṃ jānāmi passāmi, Majjhima Nikāya 1. 329). The central truths of Buddhism are ‘seen’ (Saṃyutta Nikāya 229). Even nirvāna is ‘seen’ (Majjhima Nikāya 1. 511). According to the Nikāyas this ‘knowledge and insight’ is a result of mental concentration (samādhi), and it is said that there is a causal relation between the attainment of mental concentration and the emergence of this knowledge and insight (Dīgha Nikāya 1.75).
What kind of knowledge and insight are we talking about here? -- Of course, it refers to direct, first-hand understanding of how things work.
Which "things"? -- Things as pertain to the realm of sentient beings' life and subjective experience.
What do you mean by "how [they] work"? -- General principles at play, high-level causes and conditions that shape subjective experience of sentient being.
Can you give some examples? -- Yes. Things like, what's ethically good / what's ethically bad and why. What is truly important and what is secondary (what's generally referred to as "The meaning of life"). What's possible and what's impossible in life (overall causality). The nature of mind and the relationship between mind and phenomena. The real nature of suffering and peace, and how the two originate from the nature of mind. How experience is shaped and what in our behavior shapes it.
Why is it called "direct" knowledge? -- Because it is practical experience of whoever attains it. It is something clearly seen in the everyday fabric of things, not just conceptually or in theory. "Direct" means, it is in front of your eyes, as concrete as milk and cereal.
Comment on that sutta:
What's interesting about that sutta, is its beginning and end. The Buddha is approached by a brahmin who basically says: Every other guru, just like you, claims direct knowledge into the nature of things - how are you different, dear Buddha?
To this Buddha responds by comparing different attainments with different kinds of timber, his attainment being the heartwood -- the densest, hardest and most valuable building material known at the times.
He then says that Ñāṇadassana (clear understanding) is only at the level of "softwood" - which is a very versatile kind of timber but still falls short of "heartwood":
And so, brahmin, this spiritual life is not lived for the sake of possessions, honor, and popularity, or for accomplishment in ethics (sila), or for accomplishment in immersion (samadhi), or for knowledge-and-vision (ñāṇadassana). Rather, the goal, heartwood, and final end of the spiritual life is the unshakable freedom of heart (ceto-vimutti).”
So basically, Buddha responds to the brahmin's inquiry by saying: yes, those other gurus may claim knowledge-and-vision all they want, but they are completely mistaken about the ultimate goal of the spiritual quest, which is the "unshakable freedom of heart" and is what I teach.