The main reason Michael asked Fabrizio to translate for him when he met Sr. Vitelli for the first time was to impress him with the fact that he (Michael) was a pezzanovante, not just an ordinary contadino , and the boss of the two bodyguards. Look at Michael's facial and body language--he's showing power to Sr. Vitelli. But he understands everything that Vitelli says, because every time Vitelli answers, Michael doesn't wait for Fabrizio to translate for him: he replies immediately. Later, when he's courting Apollonia, he doesn't use a translator.