I had almost exactly this same engineering test when google interviewed me in 2006. It was terrible, and left a bad taste in my mouth. Given the complexity of the work I was doing at the time, the entire thing seemed ridiculous.
replies(2):
Recruiter: "I was looking for you to say it's a fingerprint"
So I guess I was wrong, because despite explaining them in decent detail, I didn't use the one keyword.
level 1: foo, bar, baz level 2: frobnitz, barfoo level 3: 42, etc
In someone is using words from level 2 that work together in the ways laid out, they're probably beyond level 1, and wouldn't use the word 'fingerprint' (in this case) - they're giving more detail (and probably better) than what was being listened for.