Moving someone up to a senior role is giving them the opportunity to take on more responsibility and develop their skills. Very few people are promoted to a senior role already knowing how to manage a team well or how to balance requirements. The expectation is that they've shown an aptitude and potential in a mid-level role, and that they'll learn those skills after they're promoted in to the new role.

Promoting someone to senior isn't a reward for already doing everything a senior does. If you treat people that way, and give mid-level people the responsibilities of senior roles without the pay or title, then they will leave very quickly to get jobs where they do the work of a senior with the pay and title of a senior.

There’s more to it than that. If you’ve had a chance to work under someone who knows how to do the job (or someone who doesn’t, but you can see other groups that work well) then you have some idea how to do the job.

It’s similar to programming, or any other job: you write good code and bad, and learn which causes more problems; you read good code and bad and learn from it which of your own practices are good and which are not.

You don’t understand what was in your textbook until you see it in the real world. All that takes time.

A "senior" doesn't have to be able to lead a team (though they should probably learn)

If they're going the team-lead path, that's great

But it's not (and never should be) a "requirement" to be "senior"

A 10x junior engineer should be paid a lot - more than most senior engineers if everything is fair. But the rockstar junior engineer would still benefit from mentorship and someone to help them avoid some of the mistakes that we have all made.

If you look at Google, there are terminal levels that employees can reach and stay. That doesn't mean that there is a mass exodus of talent because employees want an inflated level somewhere else. They are well compensated for their work - they just don't get a new level every couple years.