I personally just code for self interest and enjoy a challenge since my job is rather stale. I can't speak from experience but I'm sure having a portfolio relevant to the type of work you're aiming for would impress potential clients and enhance corresponding skills.

I assure you having even a few hobby projects to show to potential employers is always beneficial. When you can talk about actual code you've written, often you don't even have to do any tests and the usual questions about the basics are skipped completely.

That hasn't ever been my experience. I love talking about code I've written, details of how it works, and so on. It has never gotten me out of coding tests.