Was I being stupid of connecting this charger to this device which states that it should be connected to 5V charger?
Technically, no, you were not bring stupid.
The charging capacity of the charger can be larger than the device so long as the device conforms to the charging specifications.
Within few seconds of connecting, steam started coming out of the charging case.
That’s not steam. It’s the “magic smoke” and you let it out. In all seriousness, the case got burnt to a crisp.
Now, if the charger is USB-C, one would assume that it’s compatible with other USB-C type chargers that conform to the USB PD (Power Delivery) specification. It sounds like this device doesn’t.