The code challenge is usually just one part of the interview process to see if you can produce a quality product within a certain amount of time. It's not designed to tell every single thing you outlined in your post. It's meant to provide some signal before the actual on-site interview occurs. The on-site interview is expensive on the company's part, it is easier to filter out people who can't solve a simple full-stack solution. Companies who ask things like these are looking for people who understand both front and back ends. In short, just knowing either front or backend but not both, is not enough for the company.