In Star Wars, everyone understands Basic, and, if their vocal apparatus is set up for it, can speak it as well. Folks also learn the languages of those whom they deal with often. And Threepio, of course, understands and speaks everything, that being one of the purposes for which he was built. So Han knows Hutt and Wookie, because those are the languages of his boss and his co-pilot. Chewbacca and Artoo understand Basic, but aren’t able to speak it. Jabba has the knowledge and ability to speak Basic, but deliberately doesn’t, as a show of his power. But when you have two characters who don’t speak each others’ languages, you need a translator, such as Threepio.