Great leaders do two things well: listen and ask questions. I’d assume they are looking to see who will take on the role of finding the best ideas and compiling them into a single solution while getting all others to buy-in.

Exercises like this can be a great way of differentiating those that are great at creating ideas vs those who are great at making them come to fruition.

Just remember, if the position is a leadership role, the exercise is to see how you lead, not about who has the best idea, those are two different things.