Translation:He is the least happy of the siblings.
I'm guessing that you meant brothers & sisters. ;)
I'm not quite parsing what you are saying here. Let me see if I understand this; "his siblings" is incorrect since "the siblings" doesn't relate directly to the "he" in the subject? Do I have that correct? Because if I do it still doesn't make sense to me.
I'm not sure what you mean by that guess ;)
In any case, if you write "Fred and his siblings, Paul and Jenna", you're not including Fred ("he") among his siblings (Paul and Jenna), even though they're all siblings together (Fred, Paul and Jenna). That's why "He is the least happy of his siblings" doesn't sound right (because Fred is not included in the sibling group here).
To use the names you provided I will try rephrasing the sentence, in English, as I read the Esperanto above.
Fred is the least happy of the siblings; who are Fred, Paul Jenna.
Taking Fred out of the trio of siblings makes a very nonsensical statement. Saying: Fred is the least happy of the two/three/infinite siblings involved suddenly makes more sense, but the statement is made without suggestion of numbers except for the indefinite. And the implication is also that all of those involved are mutually siblings, each to the other. Ergo: "his siblings" since we are discussing "He/Fred" his siblings.
Unless, of course "The Siblings" is a musical group, in which case it all goes haywire.
I'm not sure I understood your point; I never argued with "Fred is the least happy of the (3) siblings", just with "Fred is the least happy of his (2) siblings". But I think it's rather pointless to keep discussing the whys and whynots of this when that's clearly beside the point of the whole exercise.
Thinking back to when I was a learner (long before many of you were born), I don't recall ever thinking that el means "from." I see a LOT of confusion in this forum from people who have made that connection (possibly from Duolingo's own hints!)
El means "out of"
This includes "made out of" - but also "selected out of" -- which is the sense here. Out of all the siblings, he is the least happy.