> How does a policy like that look in practice? Presumably it doesn’t read “we want to hire underqualified people.”

For example, HR hands this decree down from on high to hiring managers: "At least X% of your hires need to be women"

If you don't get many women candidates applying (as is the case with certain types of STEM roles), you end up hiring candidates you might otherwise consider unqualified in order to try to make the quota.