It sounds like we're talking about different things.
A standard question might be "Build a chess game in 4 hours". Now that's clearly impossible. So you shouldn't take offense at not being able to do it.
But part of the job is being able to break down a complex task and propose a solution. There will be people who jump into architecture and stuff on how to build it in 4 weeks. No, you've got 4 hours, think about it.
So you have to scope down the question, and see what you can tackle in these few hours.
A good applicant will ask what the goal is. Is it entertainment? How about a checkers game instead? Is it for practice? Maybe it can be a "mate in 1" game with some hardcoded moves.
How would you even render the pieces? Would you reverse engineer lichess? Do you build a plaintext prototype? Do you TDD possible moves? How would you do user input and selection?
You get points for coming up with possible solutions. There's going to be some whiz who probably made some battle chess prototype for Ludum Dare. That's fine. They're smart, they get points. But most of the points will come from the learning process to the results.
It is designed to filter out the people who walk out when they see the problem.