If at sea level your engine is only showing say 25 in at full RPM than it is only making about 75% of it s maximum horsepower...
Well, that would be the case if there's a manifold restriction somehow, despite the full open throttle (dirty or blocked air filter, debris, kinked cable, throttle cable/linkage problem, whatever).
But suppose there's no problem in the inlet manifold whatsoever and the throttle is wide open. At max RPM the air is being sucked in normally so you have a slight pressure drop vs. ambient exactly like you would expect in a full throttle situation. But there's another problem. Say the engine is only running on one set of magnetos (or even less). Or there's a fuel flow restriction (e.g. dirty filter) which causes the engine to run too lean, but still (just) develop max RPM with the prop fully fine. Or something else internally to the engine. You wouldn't see that through an MP reduction or rise, would you?