I think the point is to remove the adversarial aspect and therefore see how they react when not under pressure. I wouldn't be surprised if OP does warn their candidates about it.
You have it exactly right. I always told the candidate in my introductory email that the segment is optional and I like to learn all varieties of new things and they should feel free to pick any topic they want.
And then when they were teaching me, I made sure to pay attention, ask questions about anything I didn't understand - not to judge their teaching skills but to show I was interested and listening.
