Maybe they assumed that each macroscopic region of the brain was essentially made of few simple neural circuits replicated over and over again to provide signal strength, much like a muscle is made of a few types of muscle fibers replicated over and over again.
Just like you don't need hundreds billions hydraulic cylinders to replicate the functionality of a muscle, they may have thought that you didn't need hundreds billions processing components to replicate the functionality of the brain.

Was this a reasonable hypothesis? I don't know if a neuroscientist of the time would have agreed, but it seems to me that it may not have been too far fetched for the Dartmouth Conference people.
I suppose that with the observation techniques of the time, the brain looked quite homogeneous below the level of macroscopic regions. The Dartmouth also lacked the theoretical insight about complex pattern of connectivity.
Moreover, computers of the time equaled or vastly surpassed humans at many tasks that were previously thought to require great intelligence, such as numerical computation.