It's almost always obvious whether the candidate really knows their stuff. They go into details, when you ask probing questions they don't revert back to generalities or repeat what they already said.
Where this does not work, however, is interviewing junior developers. They don't really know anything at all yet (well, some do, but again, that's almost always quickly obvious), so you're hiring for potential rather than actual skills.
Yeah you have to use the appropriate strategy for the interviewee. In the case of a junior, you are looking for potential and teachability as you said. You tailor your questions towards that angle. I've yet to see any take home or live coding challenge that answered those type of questions for me. All it told me is what I already knew: they were more junior and needed mentoring.
It's almost always obvious whether the candidate really knows their stuff. They go into details, when you ask probing questions they don't revert back to generalities or repeat what they already said.
Where this does not work, however, is interviewing junior developers. They don't really know anything at all yet (well, some do, but again, that's almost always quickly obvious), so you're hiring for potential rather than actual skills.