Multimodal Large Language Models (MLLMs) show promising results as decision-making engines for embodied agents operating in complex, physical environments. However, existing benchmarks often prioritize high-level planning or spatial reasoning, leaving the fine-grained action intelligence required for embodied physical interaction underexplored. To address this gap, we introduce CFG-Bench, a new benchmark designed to systematically evaluate this crucial capability. CFG-Bench consists of 1,368 curated videos paired with 19,562 three-modalities question-answer pairs targeting four cognitive abilities: 1) Physical Interaction, 2) Temporal-Causal Relation, 3) Intentional Understanding, and 4) Evaluative Judgment. Together, these dimensions provide a systematic framework for assessing a model's ability to translate visual observations into actionable knowledge, moving beyond mere surface-level recognition. Our comprehensive evaluation on CFG-Bench reveals that leading MLLMs struggle to produce detailed instructions for physical interactions and exhibit profound limitations in the higher-order reasoning of intention and evaluation. Moreover, supervised fine-tuning (SFT) on our data demonstrates that teaching an MLLMs to articulate fine-grained actions directly translates to significant performance gains on established embodied benchmarks. Our analysis highlights these limitations and offers insights for developing more capable and grounded embodied agents. Project page: \href{this https URL}{this https URL}.
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