I don't think it's a matter of exaggeration as much as just not knowing what the real requirements are. I got a small peek behind the curtain recently when a manager two levels above me asked for help posting a job ad. Their one and only question was whether they should be using the .NET or J2EE template for a new hire on a particular project. This gives you two pieces of information (at least about the company I'm contracted to).
- They use standard templates to advertise open positions.
- The people posting the ads don't even know what the open position is about.
Based on many of the job ads I've seen, I imagine that a lot of hiring managers use the same flawed approach.