False positives: we hired a few folks who could prototype changes but struggled to ship them. This question wasn't solely to blame for it, but it wasn't enough of a signal on someone's ability to _thoroughly_ work within a large codebase.
False negatives: senior candidates who were very used to a particular programming environment (e.g. at Microsoft) and didn't have side projects that kept them up-to-speed with the basics of editing code on the command line over SSH. We did a lot of work over time to setup alternative environments for these candidates.