Somehow I saw "fully automated hiring" and couldn't believe it - I just assumed it would be automated until the onsite part. If you're hiring 100% automated, I can definitely see why you'd be paranoid about cheating, but you'd better have an answer to memorization!
That would be one way to remove bias from the process.
I've often thought college admissions should be done in a blind manner. Applications go to a subcommittee that removes all race/gender clues from it, then the scrubbed applications go to the admissions committee.
Sure, you can compromise and take lower quality people, or pay more than anyone in your city, but if you want great people for top 20% of the market pay, it's a lot of work on the hiring side.
A little break to talk to humans is good. Shouldn't be your main job, unless you work in HR or something...
What you experienced is part of their experiment in figuring out how to make this work. They've got a number of variations of interviews going on right now. I believe this is so that they can scale up as rapidly as they need to.
Apologies for the lack of citation but I don't believe this is something Amazon has spoken publicly about.