Why might a journal editor reject a submission, but suggest submission to a sister journal?
That's pretty common, a lot of journals offer to move your submission to other journals of the same publishers. 

Why do they do it? Well, if they think that publication is worth anything (will get cited...) they can indirectly make money with that, so the publisher wants to have it. 

Now why wouldn't they just accept it then? 
There are two reasons. One would be it's not good enough for that journal but it's good enough for another, which doesn't seem to be the case here. The second one would be that it doesn't fit into that journal for whatever reason (likely here). In both cases they will offer you the possibility of that other journal.

For Wiley an example would be Angewandte Chemie and Chemistry - A European Journal. The latter is somehow a collecting tank for rejected publications in Angewandte Chemie and it's also the journal for Full Papers, as Angewandte Chemie does only accept Communications. (And well, all the editors there are in a certain field of chemistry, so nowadays submissions which were in scope some years ago now get rejected with "not in scope"...)