Edit: This applies for senior engineers as well.
From observation, many super sharp CS people very frequently want to write systems from scratch, get bored, then move on. It's really hard to pull them back to use off-the-shelf tech, don't over optimize, etc. Many of the best folks I've worked with in these roles are not CS majors at all (EE, ECE, etc) and this algo screening would filter them out.
There is an argument to be made here about career and skill growth. I left my previous job which was basically business-logic-to-CRUD-in-a-complex-domain simply because I stopped growing there. The moment you stop growing in software industry is the moment your career dies, at least that's my perception at this time given my personal experiences.
Solution: Make a test to test if people can do B. Studies correlate ability to do B with ability to do A.
Complication: Lose lots of candidates who can do A but choose not to get good at B.
Solution: Pay tons of recruiters to pound the pavement and turn over every rock and make sure every tech worker in the world applies.
I think they know that and they're okay with it because they have the volume and cash. I think they routinely tell you to try again.
Brainteasers are like "how many ping pong balls fit in a 747" or "you wake up an inch tall in a blender, the blades start spinning in a minute. How do you survive."
The problem itself appears to be nonsensical with no real world value but as long as it is a well defined problem with a concrete solution then it should be fine. Ideally the interviewer should be looking for how you approach the problem and what you do to obtain an answer (whether they do or not is a separate topic)
Granted, the 747 question also technically does have a concrete solution I guess, but I would end up asking things like what's the volume of a 747 and the dimensions of a ping pong ball and then point out there will be gaps as we fill the 747 with balls so it's not simply dividing the volumes, write a program based on these observations, give a disclaimer that it will most likely be inaccurate, and hope that is good enough to pass.
But that blender question... uh yeah... I'd probably spend too much time asking clarifying questions to actually come up with something plausible.
Whether or not someone is about to add ice seems like a pretty important variable.
This one does seem useful. Being able to do back-of-the-napkin (i.e. fermi problem) calculations is a pretty good skill.
The reason the 747 question is bad is because it has little to do with programming and a lot to do with how much you happen to know about planes and ping pong balls and how to estimate volumes of irregularly shaped objects, none of which have much if any correlation with programming ability.
Similar but smaller questions along these lines are given to more junior candidates often enough too, as one of multiple questions.
How do you know? Maybe the interview was for a position on the AplhaZero team.