Ich weiß, wie Menschen sind.

English Translation

I know people.

Is that “really” what this sentence means in context? some of the Clozes are already quite far off when it comes to synonyms, in that they hint for one thing and it’s in fact a totally different but adjacent verb… however in this case, the literal translation (I know how people are, alternatively: I know what people are like) is so compelling that I find it hard to believe the hint at all here.

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Welcome to the forum!
I agree, your “I know how people are” is much better.
Because If you retranslate “I know people” depending on context the German translation might be different:
Let’s imagine two mobsters talking:
“Why didn’t you end up in prison?” “I know people.”
In German that would be “Ich kenne (ein paar) Leute.”

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