Do knowledge and understanding - or lack of these - determine our reality? If so, why?
Of course knowledge and understanding, or the lack of these determine our "own" reality because you take your head with you where ever you go and whatever is in your head at any given moment determines how you perceive the world. In essence your nurturing and education can determine how you view the world and WHAT you deem important. The lack of either one of these does not necessarily impact you negatively, however it is intrinsic to the WAY YOU cognitize YOUR world.
Propaganda, advertising and modern gizmos such as facebook, bbm, twitter etc. all have a major effect on HOW we view the world. If we allow ourselves to enter this arena indiscriminately we can become overwhelmed with external peripheral stimuli which can monopolise our thought processes and taint "our world". Similarly if one were to confine oneself to a world of no modern applications and focus on any particular philosophy one would be influenced very strongly to this way of life.
Therefore whether it is knowlege and understanding, or the lack of either or both, these would provide a framework to HOW we view society at large and how we process our own thought patterns and how we interact with one another and become integrated as fully-functioning people in an ever-changing world.