1)
The standard response when you still don't understand what has been explained to you, but simply cannot tolerate any more of the conversation. It must be used sparingly however, as overuse of "Ah, I see" will lead them to enquire as to what it is that you "see", and then you're fucked.

2)
The sarcastic response for when the information that someone expects you to understand is so vastly complicated and pointless that you could slap them out of sheer frustration. Usually said with more emphasis on the "see" part of the phrase.
1)
Man- ".....and those are the differences between multi-port fuel injection and throttle body fuel injection"
Woman- "Ah, I see"

2)
Woman- ".....and that's how I know that you did what you did and said what you said on monday night, because Gemma said that Rachel said that Alan said that Dan said that he knew someone who saw you there!!"

Man- "Ah, I see"
by MagickDio February 21, 2010
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