That’s hard to do and I would guess that their ability to distinguish between what users ask for and what they need is a big part of the software’s longevity.
True, but it's also necessary. As Henry Ford (supposedly) famously said "If I had asked people what they wanted, they would have said faster horses."
I say imagined, because any actual horse owner would tell Ford they don't want a faster horse - they want a horse that's stronger, eats less, and shits less, as those were the real constraints of the horse platform[0].
(There's also a healthy dose of condescension in assuming "most people lack the (...) problem understanding". This may be true when you're thinking up a new class of a mass-market product. It's definitely not true when you're playing with some specialized product people already use productively.)
Also note the context here is pushing a new product category on the mass market. It's not about making an incremental improvement to existing product category, nor making an incremental improvement to existing product - two scenarios which most companies operate in, and in which this quote is most misapplied. In those scenarios, your users - again, note, not prospective clients, but existing users - most likely know the problem space way better than you do. They may have problems communicating the details of their feedback, so you need to actually try and understand what they're saying. Talk to them. Have them show you how they work.
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[0] - Strength translates to work/carrying capacity, eating less would give exponential savings on logistics to large horse operators, such as militaries, and as for the last part... suffice it to say that in Ford's times, horse manure was a bigger and more immediate health problem than air pollution is today.
When I suggested using a more appropriate mix of drop-downs, checkboxes and radio buttons they readily accepted.
It turns out they thought radio buttons would be easier for me to implement. They aren’t stupid people, they just don’t have any idea of how things work outside their domain.
And it sounds great, and makes you laugh the first time you hear it (but yawn the next 9,999 times...)
But think it through: how many customers really would have actually said that?
Wow, you guessed correctly! It was indeed, four guys, out of all the customers Ford had. If he had asked them, which he said he didn't.
But how many of those four would have really said that if they didn't happen to be drunk?
Wow, correct again! Indeed, zero.
So in fact this whole pithy little quote -- regardless of whether he said it or not -- is just shorthand for HAW HAW USERS DUM AS SHIT BRO LMAO