In multiple choice questionnaires such as this there's usually a number of key questions the examiners look out for - buried away quite innocently in a lot of fairly easy ones. Someone could score well by pure lucky guessing or having a vague but less than certain idea of the right answer. Santa Claus (not St Nicholas) is embedded in our culture and a child of 5 or 6 might well plump for the North Pole (not that he/she would be required to undergo the test).
But - I guess - the answer to this particular could be relevant in the case of someone misrepresenting themselves, perhaps with false Universty degree diplomas (easily purchased) claiming to love all things British, a regular listener to BBC's world programmes, readind British newspapers etc. A genuine candidate of such a claimed calibre would 'score' if they answered North Pole - but then added "mythological" or "as told to children" or "doesn't exist".
The important point is that one such Q taken in isolation would be of no account - but if taken together with say half a dozen others spread over 50 would give grounds for further enquiry if the answers were somewhat bizarre.
I read somewhere, a while ago, that the German Citizenship Questionnaire is deliberately difficult in order to limit successful applications. If that is true - apologies if not so - perhaps the British approach is just a bit more subtle.
What is beyond dispute is that immigration and citizenship controls in the UK have been disgracefully poor for many years - especially under Blair and Brown - with profound effects on the sense of us being a United Kingdom. Too late in the day, more effort is being made but with numbers much in question many think the damage is done and longer term the face of Britain will be changed forever - and not for the better.