I'm not a psychology expert but from stuff I read I bet the reason they don't ask "How happy are you, on a scale of 0-10?" is they tried that and found the same person would give different answers from day to day and moment to moment based on what is going on this very minute.
I'd also bet that they found the above "convoluted" question was one that led to the same people giving more consistent answers from day to day and moment to moment.
Even if I'm wrong I hope you see this is a much thornier problem than just asking a question and assuming the answer tells us anything about the person taking the survey.
It's easy to overlook the importance in outlining a process for evaluating each rung in the ladder.
Adding this nuance to the question serves to invite deeper thought and avoid assigning a motivation-based rating (like when you give the Uber driver 5 stars when what you felt was actually just "satisfactory").
A more basic rating question can invite other kinds of influence, such as a motivation in how they'd like their life to be perceived rather than how they genuinely feel it to be.
In surveys with less nuance the data tends to correlate around the extremes.
It's the "best possible life for you" part of the question that makes all the difference.
I have done survey methodology research and fully agree, almost assuredly when you see questions worded in a seemingly "convoluted" way like this, the reason is that there was exhaustive research that found this wording was the best balance of reliability and validity.
There is also a lot of value in a question that works well enough, that you ask consistently over long stretches of time (or long stretches of distance). Maybe it's not perfect, but the longitudinal data would be worthless if they updated the wording every single year.