KRS is trying to put together a project and has to schmooze a lil bit for business. It may not be sincere or it may be sarcastic or just trying to respect Wayne's skills. Wayne may be hated by many hip hop purists but he does have some decent lyrical skills.
Wayne himself did not really embrace that title until after Jay-Z kinda stepped down. Many have tried to claim the title and Wayne admitted on an interview that it's mostly about the bragging culture inherent in hip hop. I think he said that after Jay-Z made some cutting remarks about this topic.
This was also not an occasion to debate serious opinions about the GOAT in hip hop. It seemed to be just an informal meeting. I seriously doubt if KRS, a self-proclaimed hip hop scholar and purist, really feels this way after over 30 years of hip hop history and taking into account the current state of modern hip hop here in the first decade of the 21st century.