It’s overthinking the problem. Technically, saying it can hold 7 liters is incorrect because if you poured 7 liters into it, it would immediately spill. The question wasn’t about maximizing capacity but rather how much it can actually hold. It can’t hold water as is. If it were flipped, it could, but that’s not what you were asking.
It says “adding water” isn’t feasible unless the bucket is flipped.
I think it’s assuming, quite reasonably, that you’re asking how much water the bucket can hold in its proper orientation.
Sure, you could flip the bucket and add water, but as soon as you try to carry it by the handle, the water will spill out.
In fact, this is pretty solid and thorough logic for an LLM. A less advanced model might realize you can add water from the bottom but miss the fact that it would spill when the bucket is held upright.
A more sophisticated model might even suggest you could carry 7 liters if you hold the bucket upside down, though depending on its shape, that could be tricky.
The question wasn’t about the volume of the bucket; it was about how much water it can hold. Unless flipped, the correct answer is zero.