Were children smarter? Unlikely. However, those who reached 8th grade had been taught what they needed to pass this test over the prior 8 years. If they didn’t pass - and it would be interesting to see the pass rate - they were done with formal schooling and went to work.
Intelligence is not the difference. Discipline is the difference. Teachers weren’t paid to babysit and propagandize back then; they were paid to teach.
And even if they did pass, many were done with formal schooling and went to work on their family farms or in their family businesses. And were better educated than many college grads today.