This is insane -- how do these people pass through an interview?

It depends on the person interviewing you.

It's common enough for them no to be technical at all, such as a scrum master or project manager, it's also common enough for the first person on site (those working for really low remuneration and a lottery ticket) to just not be that good.

This is crazy to me. Any reasonable certification to qualify someone for an AWS specific role will cover IaC in depth. I guess it explains a lot about the number of cloud antipatterns I see on a day to day basis though.

I've seen people with certs who are fairly crazy too, and heard comments like "$foo is good in theory, but it's not really possible in practice".

I'm afraid its a large part of the market here, but you're more exposed to the different parts of the market when you're contracting and thus moving around on a semi-regular basis.