When did Oliver understand the funny game Fagin played with him?

Oliver didn't understand the "funny game" they played until he saw Dodger actually pick a man's pocket. He never saw the game as a bad thing..... he saw it as a bit of fun.

What was Oliver's horror and alarm as he stood a few paces off, looking on with his eyelids as wide open as they would possibly go, to see the Dodger plunge his hand into the old gentleman's pocket, and draw from thence a handkerchief! To see him hand the same to Charley Bates; and finally to behold them, both running away round the corner at full speed!
In an instant the whole mystery of the hankerchiefs, and the watches, and the jewels, and the Jew, rushed upon the boy's mind.

He stood, for a moment, with the blood so tingling through all his veins from terror, that he felt as if he were in a burning fire; then, confused and frightened, he took to his heels; and, not knowing what he did, made off as fast as he could lay his feet to the ground.