Is the process great? Absolutely not, and I'm sure that these places miss out on qualified candidates because of the process and hire some people who gamed the process. Things like degrees and LeetCode tests and other screening methods are just ways to reduce cost and risk to get that "good enough" threshold.
Understaffed projects might lead to failures, people quitting, expensive consultant aid etc.
Hireing a bad programmer and two good and ending up giving the poor one easy tasks or letting him go might be cheaper than hireing two good more slowly.
In general I feel the recruitement process is so random anyway that employers should just get it done and pick someone after throwing darts at a billboard with resumés for picking some to interview.
Should movements such as 'get [anybody with a pulse] into coding' succeed, you can expect to see an ever increasing absurdity in requirements. The reason is not to try to be elite or whatever, but because the reality is you have to get rid of of > 90% of applications, for larger companies it may be > 99%. And so as the number of applications increases, you get an ever larger quantity of people with at least the minimum requirements and so you are forced to be increasingly selective.
Does passing some leetcode task mean you're a good developer? No, of course not. But if you take 100 passable developers and you're looking for the best, are they more or less likely than average to be able to pass such a test? It's the same reason that even though a college degree has absolutely 0 relevance to serving coffee, you're increasingly seeing companies "preferring" college degrees for their barely above minimum wage baristas. [1] If you take 100 potential baristas is that best of the best of those 100 more or less likely to have a college degree? Even though it has nothing to do with the actual job, it's just a decent way to filter 100 down to 1.
[1] - https://www.inc.com/suzanne-lucas/why-that-barista-has-a-col...