There are lots of stories (and also some info) on engineers working at FAANG making ~$400k a year or up. Granted these are not your typical engineering jobs, but they do exist and in not so insignificant numbers; say it's 1% of engineers (made up number).

I am curious though as to the distribution of freelance / contract rates. Is $200 / hour also 1% of engineers? More? Less? Financially for the same person what's actually a better route? For someone that can get $400k a year at google, is that better or worse than the contract route on average?

$200/hour definitely isn't the top 1%. On the other hand you could work at FAANG and run a company as a side project, you could use some of your connections there to get interesting contracts.

A lot of things. Remember, this doesn't include their health insurance or a 401k and they will also have to pay self employment tax.

I think if you're making $200/hr and "bouncing around," you're not necessarily billin 2050 hours per year.