Recruiting is actually an incredibly expensive and painful process both for companies and for hirees. We definitely need some way to automate this to make it easier for both parties.
When you think about it, there's a lot of waste in the process of looking for a job. You have to search through a bunch of job ads that all say very similar things. You have to go and tell each one you're interested in the same things about you, and if you're a programmer you get put through a variety of practical tests all attempting to figure out the same thing: whether you're good or not.
If a person's relevant attributes could be captured one time and used for every company they apply to, that would save a TON of people's time. Company employees wouldn't have to spend as much time (away from doing product-related things) peppering candidates with questions, and candidates wouldn't have to spend so much time being peppered with questions.
Any attempt to do this is a step in the right direction. I don't know anything about Codility, but is sounds like they're trying to do a piece of this. In that respect, I don't get the same feeling you do that something is really wrong about this. I do, though, think there's a danger that people use this kind of tool wrong and judge people wrongly because of it, but this misjudgment problem already exists.