I always thought that was some kind of urban myth that programmers made up to make themselves look better.
For example a good developer should be able to solve this problem even if he has never used the technologies involved. It is that simple of a problem. I have never developed in Ruby in my life, 10 minutes on Google gave me all the Ruby API's I needed to complete the challenge. You see a good developer sees the solution and then figures out the API to do what they need it to do. Mastery of the technology is not what makes a good developer, seeing the solutions is where the value of a developer should be measured.