Uh, what experiences have you had that make you think otherwise? Google is the greatest information-finding service invented but it can still surface poor results.
But in this case, I don't think Google was necessarily "fooled". The developer happened to be multitalented enough to create a game that was popular. Assuming that the traffic it receives was legitimate (which I imagine Google can know based on Google Analytics), how is that not a signal that the domain belongs to someone of more notability than just some random domain? The problem would be if Google used that signal as the sole determiner of whether Instapainting.com was a place to find good paintings. But there's no indication that that is the case, just that clout gained from the popular game may have helped Instapainting overall be seen as a legit domain, generally.
>Ideally, Google wouldn't credit one part of the site that is lower quality than the other part. //
Site authority presumably wouldn't be a thing if it didn't produce good results. Sites that allow crappy content will tend to have more crappy content and so a page on such a site is less likely to be what someone is searching for; as long as that stands then site authority will still be useful and shouldn't - IMO - be discounted completely.
They may temporarily bump a site up based on new "authoritative" incoming links and then make judgements from a combination of user time on site/bounces back to search results and clicking on more results and additional pages. Longer term there is definitely manual human review looking for "spam."
But in this case, I don't think Google was necessarily "fooled". The developer happened to be multitalented enough to create a game that was popular. Assuming that the traffic it receives was legitimate (which I imagine Google can know based on Google Analytics), how is that not a signal that the domain belongs to someone of more notability than just some random domain? The problem would be if Google used that signal as the sole determiner of whether Instapainting.com was a place to find good paintings. But there's no indication that that is the case, just that clout gained from the popular game may have helped Instapainting overall be seen as a legit domain, generally.