Assuming (for arguments sake) out of everyone who applied you where the most ideal. In that case since you were not hired, either you or the people responsible

Assuming (for arguments sake) out of everyone who applied you where the most ideal. In that case since you were not hired, either you or the people responsible for hiring made one or several mistakes. Most likely it was multiple mistakes on both sides. None of those mistakes were "ask a potential hire to do a simple demonstration of ability". Instead it was mistakes (on your part) like getting nervous and choking (something everyone does)...and mistakes on their part like not making the candidate feel relaxed, not providing enough guidance, and placing too much importance on one aspect of the interview...etc