Earlier quoted context omitted.
My solution is to produce a design in my head, and figure out its limitations. Then I ask for each limitation if this limitation will be a problem. If it is, then I figure out how to iterate the design to eliminate that limitation. Once I don't know of any unverified limits, then I start explaining my design, and explain how I know it will perform to spec. This is also a good way to approach system design in the real…
Only if the interviewer cooperates with candidate. In my past cases, some interviewers are just nuh-uh or "let's continue" or just keep saying the original ambiguous requirement without stating additional requirements or giving any feedback.
If an interviewer cannot tell my design skills from that, then I figure that the company failed, not me.