Be thankful you are out of that company. Clearly too many Pointy Haired Bosses.
I'd tell the truth, but only go into the highest level of details. something like:
I've got 5 years experience, and the company wanted a new Director level manager with 15 years experience.
This is great for you (the new company) since I'm smart, hard working and learned a ton in my 5 years.
Say something like "there was a reorganization and some positions disappeared." Be sure to say it without sounding bitter. The goal of your answer is to make it sound like it wasn't your fault (which it wasn't) and that you don't have hard feelings. Bitter people are hard to work with. I think another goal is to be succinct so you can go back to the technical parts of the interview.
I do ask this question at interviews. I ask for two reasons.
Sometimes it is a marketing opportunity. My job has sane hours. Former Goldman Sachs hires are often burned out and concerned about this. Which means I get to comment about why that isn't going to be a problem. Which makes the candidate more likely to accept
Sometimes a candiate didn't prepare for this question and sends up a red flag