What's she mean by "I know?" What does she know?

Native speaker’s answer
Rebecca
So, here, "I know" means to be in an agreement with something. And here, it's actually a response to their body language and looks of disturbance and confusion. By saying "I know," she's agreeing with their reactions to the statement being gross and disturbing. Ex: A: I miss hanging out with Rosie. B: I know. Me too. Ex: I know. It's gross.