An 8 hour onsite interview costs me 8 hours and it costs the company 8 hours, so they're not likely to bother with it unless they think I'm in with a good enough chance to be worth the investment.

A 5 hour homework assignment costs the company nearly nothing, but it still costs me 5 hours. This means the company has no incentive not to waste my time.

Most companies would be very happy to screen 100 potential hires with 5 hours of homework each.

Very few would be willing to commit internal time to 100 onsite interviews of 8 hours each.

So the latter sends a signal to the potential employee that their time is at least as valuable to the company as the time of the interviewer(s)

No, no it would not be okay. A couple hours over a couple different days, followed by either contract to hire or a short paid sample is how I hire, if and when I do it.

There's no substitute for actually working with someone.

When you spend 5 hours on an assignment alone, stressed because you need a job & your time is short, only to not get a response after several email follow ups, you will see the logic.

I wouldnt do this for the same reason i worked at a gas station over taking an unpaid internship:

If the company isnt willing to make some investment in you, they arnt worth investing your time into.

Where did he say anything about an 8 hr on-site interview?