Then discuss things you would do next given unlimited time etc and justify those points. That's plenty insightful into what a developer prioritises and how they approach software development.
Expecting a perfect solution isn't reasonable.
Oh and by the way the people asking me for that work were significantly more junior than me. I politely passed on the company and even beginning the take home test.
I have also had a company give me an API to build with sparse instructions. I did my best, I probably should have asked them more questions. I got no response. I followed up weeks later to see if there was more I could do with the coding exam or if I misunderstood it somehow. They didn't have anything else to say about the coding exam but they did invite me in for an in person interview. They then ghosted me and my further follow ups about the status of the hiring process.
The thing about the hiring issues in the industry is they aren't as simple as the solution you offered up. They are systemic and it doesn't feel like anyone is even trying to improve them. And that the changes that do happen are equally but differently absurd in their expectations as the mistakes of the past.
That said, there are certainly jobs where some sort of "audition" is clearly reasonable and even necessary. The arts are obvious. But I've held a number of positions where writing (and analysis, presentations, etc.) for external audiences was a big part of my job. You can be sure I want to see a writing sample and maybe even a presentation from a candidate for a similar role. If they already have some writing samples, that may be OK. But, if they don't, they're going to have to create one.