Do the majority of those who learn to drive at a driving school understand how to turn the steering wheel when the instructor teaches them?

Yes.  It is NOT that hard.

The majority never figure it out, crash  and flunk out of driving school.

The answer depends on if you were raised in a car-centric culture by a family of car owners.  Most of us who have been riding in cars for 13 or 14 years and watching our parents (and older siblings, and friends) drive understand the steering wheel instinctively, even at our first driving lesson.  Even at age 10, if my mom or dad had to blow their nose (or something where they needed two  hands) they would ask me to take the wheel while we are out on the highway somewhere.  I didn't think anything of it.  It wasn't scary, or a special privilege....it was just...SOMEBODY has to drive this thing!!!  (hahahahahaaaaaaaaaaa....)

But I've had the privilege of having some close friends who grew up in cultures where the first car they ever touched was one with a steering wheel on BOTH sides of the vehicle (driving instructor mod).  Steering for them is (surprisingly?) not a natural instinct at all.  It is something that they literally have to give a lot of thought to, and agonize over getting it right or wrong...

Even if you grew up in a car culture and think you SHOULD know better, don't beat yourself up too bad if your first attempts at steering are a bit sloppy.  We all have to start somewhere.  Practice makes perfect...

Since I don't personally know "the majority" of those who learn to drive at a driving school, I cannot tell you. Neither can anyone else because nobody else knows the majority or what they understand either. Driving school students number in the millions and very few people know more than a few dozen other people. 

No most of them just drive straight into the closest solid object in the way. 

C'mon, use some common sense - turn left go left, turn right go right - how hard is that? 

They take beginner to a parking lot and get them used to steering and then steering more precisely, stopping, going, turning after a stop etc. They aren't going to let you go on a public road without having enough skill.