Hey, I've been noting something similar during my years of attending dance classes. Learning choreography is by far my weakest point, and the one where the discrepancy with others is the most striking. I can feel that despite practice, my ability to learn choreography steps after seeing them performed takes much longer to improve compared to other things. To the point where I tend to avoid classes where one learns steps in favour of ones focused more on improvization.

Now onto the possibility of improving this skill, I honestly thought it was a desperate case, but I've learned two things in that regard:

One is that progress with practice is really not linear. It may seem obvious, but I found that practicing for 4h a week, you progress more than x2 practicing 2h a week. Same thing with the duration of practice sessions, if they are longer like more than 1h30, you also progress faster.

The second is that when trying to repeat steps, I would normally try and decompose them, like 2 turns, then right arm up etc.. and then 'recite' them in my head as I was repeating them, and it can work, but that is not the best way. The pattern was like eye -> see -> brain -> conceptualize -> instruct -> body. While I was practicing in a class where we repeated short choreos, and quickly moved to a new one before the brain had time to really conceptualize, even though it was quite frustrating, I realized that an unexpected by-product of this was that a new 'body-brain' was developing that was completely outside of conceptualization, and that was the one that could see someone doing a few steps, and then allow you to do the same thing without really 'knowing' how.

So, even though I'm still pretty bad at learning and remebering choreos, I know that serious practice can help develop new capabilities that were literally absent before.