It could be that, but it doesn't have to be.

If you're on a team that isn't currently having staffing issues, I don't think it's weird to want your next hire to be better than the median person on the team. "Raise the bar," etc. Asking harder leetcode questions seems like a bad way to achieve it, but I get the impulse. If the bar for member nine of the team is approximately "better than the bottom 4" then that 9th person in is likely to have at least one moment of "wait, how did you pass that interview?" at some point after they come on.

Or they don't have the time or manpower to fix/learn things and are trying their best to hire someone to help right the ship before bringing you onboard. Such a negative take.

Which engineer that is that good would spend years of his time improving a low performing team?

One who needs a good, steady paycheck at a stable company? Just because hiring team doesn't have time to learn/apply a specific piece tech on the job doesn't mean they're low performers or less competent than the interviewee. They can be sufficiently busy with their current jobs and need someone experienced to lay the groundwork for others to run with. People that go and implement stuff when they're already busy usually half arse it. Those people are just creating issues that'll be fully realized months, years later.

If you say you know tech X, manager wants to hire for tech X to solve a business need, and I'm asked to help interview, I may ask you questions about things I don't know or do myself because it's my professional responsibility to my employer and manager to help them hire a quality candidate. Maybe some people use the interview as a place to be jerks or show off but that's not always true. Personally I'd rather not be involved in the process at all.

They want someone to do all the work so they can continue coasting, team effort!

Power game.