Is there such a high correlation? I used to do a lot of hackerrank-style problems for fun, a few years ago. If I had to evaluate my ability to write code back then: pretty crappy.
I was good at writing functions, I was bad at writing programs.
a) your understanding of the basics is solid;
b) let's face it, these brain teasers are often proxies for intelligence testing.
If they have a glut of candidates for every position, whiteboarding data structures and algorithms makes for a decent filter.
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[0] - There are plenty of better options, but they tend to not scale - so they cost more, and companies avoid them.