It measures runtime, but not reliably, multiple runs of the same code can report very different runtimes. My impression is the focus is mostly on getting the time complexity right.

Suggestion (not for you specifically, just a general comment): never answer leetcode questions right away. Push back and ask the interviewer to describe the problem they're actually trying to solve. Probe their constraints - memory limitations, throughput. 99% of software isn't going to be the leetcode algorithm but the reasons for it being there. (Caveat: I haven't had to be in an leetcode driven interview for some years, and this probably doesn't work great with people that love algorithms more than getting something done.)