I don't use this as a trick question. I ask them to describe mutable vs immutable objects and gotchas. Then I write this function and ask them to describe in excruciating detail what it does, why, and how.

It is simply a easy way to gauge a candidate's proficiency with the language. It also helps if they know that this is a problem. You'd be shocked to know a lot of people on the market for jobs writing python don't get this question correct, but the smart ones often do when talking through it even if they didn't originally.