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She found it impossible to understand what he was saying.
Literal
She [topic-は] his [genitive-の] saying thing [object-を] understand [nominalizer-の] [subject-が] impossible [quotative-だと] realized.
A double embedding. 彼の言うことを理解する ('understand what he says') is the inner clause — verb-headed, with こと nominalizing 言う to make 'the things he says.' Adding のが impossible だ frames the understanding as the subject of impossibility. Then と as quotative + わかる ('realize, find out') makes the whole thing 'realized that it was impossible to understand.' Three layers of nesting in one sentence.