What is John's newfound understanding in By the Waters of Babylon?
Early in the story, the reader learns that John is forbidden to go east. He is forbidden to go to the place of the gods. Unfortunately, the reader doesn't learn why. Because the story is told in first person, John treats these rules as normal, and he doesn't wonder why, like the reader is wondering. As the reader learns more about John and the post-apocalyptic world that he lives in, the reader discovers that the rules about going east to the place of the gods are superstitious traditions. Those rules are being perpetuated by the elders.
John does go east to the place of the gods and learns a lot. He, and the reader, learn that the place of the gods is New York City. John learns that the inhabitants of the city were not gods, but regular men and women who had great knowledge. After John learns this he vows to help his people begin relearning the lost knowledge so that they can once again be great.
"That is all of my story, for then I knew he was a man—I knew then that they had been men, neither gods nor demons. It is a great knowledge, hard to tell and believe. They were men—they went a dark road, but they were men. I had no fear after that . . . Nevertheless, we make a beginning. it is not for the metal alone we go to the Dead Places now— there are the books and the writings. They are hard to learn. And the magic tools are broken—but we can look at them and wonder. At least, we make a beginning."