Hi! A few sample sentences to make it easier to understand the difference:
I mistook you for Peter. I'm sorry about that. (I thought you were Peter.)
Please don't mistake my intentions. ("Don't interpret the wrong way")
You can't mistake their house - it's the huge yellow one. (you can't confuse it with another house)
Don't misunderstand me, I'm grateful for everything you have done. ("Don't get me wrong", "Don't misinterpret what I'm saying")
I thought you were a doctor. I think I misunderstood. (I thought you were a doctor, but now I see you aren't.)
He feels he is misunderstood by everyone. (He feels no one understands him.)
Hope this helps.