That because Agent Smith took out his ear piece, he wasn’t aware of Neo and Trinity’s attack on the building.

That’s my take on it at least

Smith take his earflap(not sure if it’s the good word)/ear communication device. It’s a « subtle » nod that Agent Smith is becoming more erratic and that he is becoming something else (the second film call him a virus), something not controlled by the Matrix. So when Brown say « he dosen’t know », he’s understanding that Smith was not inform that Neo and Trinity are attacking the building because he have disconnect himself

I, too, originally took the line to mean that Smith didn't know what he was doing, like he was out of his mind, which played into the deranged speech he'd just given. Turns out I was reading way too far into it.

what I mean is, a machine wouldn't "retort" or be passive aggressive like this.

They're not just machines or programs, tho. They are the typical sci-fi AI with full on human-like cognition. Unlike real world "AI," the AI in The Matrix is actually capable of thoughts and feelings, so thinking in that direction isn't necessarily off-base or too wild.

But I am pretty sure what they were referring to when they said "he doesn't know" was the assault on the building taking place. Not that he was saying Smith doesn't know what Smith was doing. He took his ear piece out when he asked to be alone with Morpheous and since he is bound by the rules of the Matrix, that meant he didn't hear the radio chatter likely that would have alerted him to Neo and Trinity blowing shit up downstairs.