"I understand English a little / a bit" - are both OK and mean the same thing.
When using "a little bit", it sounds better to use it as the object of the phrase e.g. "I understand a little bit of English"
In practice, all three have similar meanings. However, you could say "a little bit" for emphasis e.g. "Do you know English?" "Yes, a bit" "So can you have a conversation then?" "No, I actually only know a little bit of English"