I loved this sentence, I dun know why! :D
Yes, there are people with taste everywhere.
Does 'Geschmack' have the same context in this case as the English meaning? Or is it just Duolingo throwing in a wacky sentence meaning 'The people with flavor'?
Both, actually. When rephrasing it to 'Menschen, die Geschmack haben', meaning 'people who have taste', it get much clearer.
Do not rephrase it, it's fun this way ;)