[not native, but fellow learner]
I would say the the preposition "in" depends on the verb using it in this case "siamo/essere". So with essere it means "in" in English. With "vado/andare" it means "to" in English. However I think "siamo in piscina" can also mean poolside or by the pool. ~ that's kind of like "at the pool" so maybe it should be accepted.
Indeed, it MEANS "we're all AT the pool". To translate "IN the pool" means that whoever translated it, doesn't know either English or Italian.
I thought it might mean "we are all at the pool" using the same logic as argybar but I guess not.
Last time I was wrong when I wrote .. in the pool ... (because it was supposed to be .. at the pool) This time I'm wrong for saying ... at the pool. I give up!!!!!!!!!!!!!!!
Because "in piscina" is a set phrase. There are others such as "in spiaggia", meaning "at the beach". It's just how it is.
I keep typing "We are all in the pool" as the translation. It comes up telling me I am not correct, BUT it says the correct translation is "We are all in the pool." Have typed it in at least four times and it won't work correctly. It's my last thing on that lesson. Earlier in the lesson I had typed "We are all in the swimming pool," which should have been acceptable, but it wanted "We are all in the pool." Now it won't accept its own answer as correct. Frustrating!!
Maybe your keyboard is in a different language that's not English but with the same letters as English.
If 'vado in piscina' can translate as 'I go to the pool', then this should be translatable as 'we all go to the pool'