Earlier quoted context omitted.
"Higher bar, paying less" seems a strange choice, though.
My experience on the hiring manager side suggests that when that happens, what's usually going on is that the experienced dev failed to meet the higher (level 3) bar but seemed like they'd be a solid individual contributor at level 2, and therefore received a SWE2/PR2/Foo2 offer. In other words, "same [lower than they expected] bar, same [lower than they expected] salary" as someone 2-3 years in industry.
The questions being asked have nothing to do with solving the types of problems that my experience is indicative of, or of the teams/projects/products I've lead. Nor are they types of questions that even measure for engineer work experience and how they approach solving the types of real world problems that 10 minutes of white boarding a bit counting and funky array manipulations alg won't show. They are questions that are really catered towards recent grads who that I haven't think about or practice since college, and then not getting the job because of that is strange to me. Especially when they could be asking me interesting real-world technical stuff like on multi-threading, concurrency vs parallelism, performance optimization, more solution architecture are parts of the tech stack, project management, team managements, hiring strategies, dealing with low performers, etc. It's also humorous when companies aren't doing anything technically sophisticated, yet their interviewing like they are, for example doing NLP through third-party APIs, or when the most sophisticated part of their stack is using two caching solutions with Mem-Cache and Redis, or just writing APIs the read/write to and from a couple different data storage, systems, etc.