Yup! The interviewer can see my thought process. I can also evaluate my peers and ask questions about the work. The interviewer can also see how easy or cumbersome it is to set up the environment and code in the allotted time. Win-win.
If I was hiring a junior, perhaps that would have some use.
It's not about what's useful to you. Not everything has to be about you. It's acknowledgement that the interviewee's time is worth something (approximately about as much as dev time) and that you're willing to pay for it.
Yes. Put in the time with me to show you're serious. Otherwise you could mass spam candidates, most of which you don't actually care about.