My guess is the "whiteboard interview" morphed over time and lost track of the initial intent and value.

I bet initially, code wasn't a focal point. Hiring for a position that _requires_ an understanding of certain algorithms and/or data structures, it can be a quick and simple way to outline or walk through examples at an abstract level. (both to test knowledge of existing examples, or development of a solution to a new problem)

This actually _removes_ many of the overheads associated with code: syntax, scope, state, context.