I think a big part of the reason this was a theme in TNG was because it was supposed to get people in the '90's to reflect on whether the USA was actually the hero of the story that our history, politicians, and media tells us we are, or whether the idea that we're "more civilized" than other countries was a lie we spoon-fed ourselves.
I mean, it's an idea that sat with me most of my whole life. We are not the heroes of our stories, and a lot of the stories we tell ourselves are kind of a self-deception propaganda to justify why we have a higher quality of life at the expense of the rest of the world.
USA was at the time a country that promoted itself as one of the least violent and most civilized nations in the world. The US government was hiding behind "We don't cut criminals heads and hands off" as though we don't use psychological torture much more often on our own populace.
They can't really hide behind "our police aren't violent" so much anymore, because it was clearly always a lie.
I felt like it was a plot device to show how humans are capable of great things, not that they always are the best. Picard was always supposed to be the philosophical pinnacle we should desire to reach. I mean it's already a post-scarcity society where pursuit of wealth is viewed as a negative. I saw it as that humans and the Federation still had a long way to go, despite their successes, much like the USA in the 90s.
Q is omniscient, so he already knew that our history is rife with examples of good people and bad people, brilliant and ignorant... and he comes to judge a fairly utopian future society of a unified, post-capitalism, post-religion Earth? My dude, they're doing fine.
This assumes Q was there to actually judge humanity and not begin a dialogue with Picard and the Federation. In his own omnipotent way. It's not a judgement, it's more of a test or like a training.
Q isn't arguing in good faith because he wants to see humans "rise above it" as it were. It isn't fair, but it is a quick way to reveal if their most base impulses will take over when under pressure.
Q sees human society in TNG as on the path to becoming better than they already are, but thinks they need some prodding to make it there.
It's almost Nietzchian in a way. He wants humanity to leave the worst aspects of our culture which are holding humanity behind, and that takes effort and self-reflection and consideration. Q is trying to kickstart that self-reflection, consideration, and effort. He knows Picard is a good man and can do it. He definitely has a "thing" for Picard and I think it is close to love. It is why he chooses him.
He wants Picard to no longer simply be a real mensch, but a real ubermensch.
Sisko doesn't realize its a test to make humanity better, and just sees a Nazi arguing in bad faith.