Having been a contractor for a short while (~1 year) and having worked with many different contractors over the years I've never seen a situation where management has been like "this part of the codebase is too much of a mess for us to handle, we need to hire a contractor to sort it out". Does that ever happen? Surely a contractor would be even less prepared than a permie to handle such a situation because they won't be familiar with the codebase?

In my experience contractors are mainly hired for development of new projects or features when they'd like to get some more hands on deck to speed up development. Or because the company would like to hire a permie but can't for whatever reason (not sure they will have enough work in the long run, can't find the right person etc.).

Also I've never seen a contractor that who's day-to-day functions were any different from that of a permanent employee. Where are these companies that let permies play ping pong for hours but have the contractors chained to their desk churning out features and reducing technical debt?