This comment is a prime example of how the non-technical founder understands the world.
Proprietary systems are company IP. Talking about the design of the system is protected by the NDA, which the exercise described above is asking the candidate to do.
You hire for the skills to develop your own proprietary system. The employer doesn't own the skill. The employer owns anything those skills produced for the employer.
You wouldn't want your employees giving the recipe to your secret sauce away to your competitor, right? That's what everyone is talking about.