I think it has to do with headcount requirements once you're Google scale too. Leetcode style interviews become yet another "process to avoid disaster at a big company". Disaster here means hiring a bad engineer and then having to fire them for performance reasons or whatever. Google's whole concept of hiring committees like it was graduate school also reinforces this. They probably do this to minimize nepotism at the hiring stage.

All these processes become items on a hiring checklist, but to your point, it doesn't guarantee hiring a great engineer. Just one of those tragedies embedded alongside other big co bureaucracy processes.