He lacks emotions. He can't understand what others are feeling because he doesn't feel things. He was built and developed with the human colonists where Soong worked. He lived with them, and their input shaped his programming; he was not kept in isolation apart from the society around them (though he did have those memories wiped when Soong implanted the memories of the colonists when the Crystalline Entity attacked). The only thing he lacks is an emotional understanding, since he has no emotions.