I think this is a really important distinction. A whiteboard is a good place to draw out a system design and inform the whole room how the pieces need to fit together. It is an important skill as a developer once you get to a certain point and is not a bad thing to ask a candidate to do.

Asking to come up with a recursive pathing algorithm for your custom tree implementation in c on a whiteboard when they are applying for a ruby job maybe not so much....