It boggles my mind.
This isn't to say that those people don't add value, but if they do this for a few years, they may find that their ability to do greenfield coding has significantly diminished, so much so that they struggle to write objectively simple code because they've fallen out of practice.
Source: I've been one of those people, and I've worked with many. It's an easy rut to fall into, particularly in Test Engineer role (what MS used to call SDET roles).
I work in a non-tech company (bank), so I assume the general caliber of candidates is quite lower than what a bonafide Silicon Valley style tech company would see.
Would the typical candidate I interview be able to pass a DS&A leetcode medium or hard, getting the superoptimal solution on the first try within <40 minutes? Probably not. Maybe most of them wouldn't be able to do so on a harder leetcode easy problem either.
But most are still able to code up an acceptable solution to a more "realistic" in-person coding exercise we give them.
There's also the type that accidentally falls into a manager-type role way too soon, before they've actually had a proper chance to learn programming well. Then whatever basic skills they had atrophies quickly.
If you assume the top third of candidates only need 2 interviews to get an offer, the middle third need 5, and the bottom third need 15, then 15 / (2 + 5 + 15) = 68% percent of the candidates you interview will be from the bottom third.
This, of course, ignores every human factor but it is a starting point.