When I did interviews and asked about side projects I’m looking for another topic related to craft to talk about. If you don’t have one fair enough, but in that case I would expect that for school stuff you can elaborate more than “we did a thing in Java”.
For questions about hobbies it’s the same. You need something to talk about to gauge fit into the team.
I have some side projects, and employers have rarely asked about them or cared at all.
> Worst yet its often phrased in the interview as "do you have any hobbies?"
I think you're projecting here. Perhaps they just want to know about your hobbies?