1. The understanding that the reasons why people might want something may differ from one person to the next.
2. The understanding that people can have different beliefs about the same thing or situation.
3. The understanding that people may not comprehend or have ...

This is a social-cognitive skill that relates to the ability to think about your own mental state and the mental states of other people.
It's called a theory because what we believe is going on with other people is just that - a theory.

Theory of mind skills tend to improve progressively and sequentially with age.