That is how I understand it as well.
To me, common sense is the ability to effectively assess practical (rather than theoretical) situations using existing knowledge and experience and to make good decisions as a result.
I know that common sense isn't always about people or relationships, but it is where I most often hear comments about common sense made.
In a simple example - a biology student sees a large group of bees buzzing around a hive, gets closer to take a look, pokes the hive to see what would happen and is badly stung as a result.
If the biology student considered the knowledge they had, the common sense approach would be to not move toward the hive until they knew more - is there a bee keeper around, are the bees in a calm state etc.
People without common sense don't seem to know how to put theory into practice. They might know, in theory, that something is a bad idea, but they can't seem to avoid doing that bad thing. I'm not sure whether it's more often curiosity or lack of curiosity that causes the problem.