If my experience from the other side is transferrable then no, they do not expect it to take 2 days. They actually mean what they are saying.

Unfortunately they are developers. They underestimate how long it will take. They didn't actually try it themselves. They might even have modeled it after a piece of software they did build in-house and thus underestimate even more.

I had to advocate very strongly on cutting scope from our take home test and multiple times argue against 'extensions' of the ask.

I like take home. It's a great way to talk about their code. Have them explain choices. Pros and cons. And yes tests please. What I look for is not complete test coverage or having 27 classes that all have pseudo tests. Have one class with _good_ tests. Show that you understand what is important to test and how to do that. If you know how to do that, I can hire you to repeat it for a salary.

My own last take home I sent in didn't even run because the implementation assumed various external services that I didn't bother implementing or mocking out enough to make it all run. I put lots of comments explaining various choices and what I'd expect those external services to do though. Was a great topic started about code comments and which ones I would leave in actual code and such.

The problem being of course, that from the applicant side you don’t know if they mean it or not.

So you’ll be competing with people that implement the whole thing regardless.

Now I’d like to think that interviewers are entirely impervious to that, but realistically, it’ll hurt the chances of those that do it only halfway.

Try it. I can tell you from the other side that if you know your stuff your evening (2-3 hours) output will be way better than many that take 2 days.

If you don't try you've already lost.