Gygax explains it in his DMG, p 20:
This ability assumes that the longuage is, in fact, one which the thief has encountered sometime in the past. . . . Even if able to read a language, the thief should be allowed only to get about that percentage of the meaning of what is written as his or her percentage ability to read the tongue in the first place. The rest they will hove to guess at. Languages which are relatively close to those known by the thief will not incur such a penalty.
Those cunning thieves - they pay attention to all the runes and sigils and scraps of this and that that they encounter on their travels . . .