One place I interviewed with last year did something similar in that it was more of a BYOSD (bring your own system design). So it meant I got a chance to think through complex systems I've worked on, mock up a diagram beforehand, and then present it to the interviewer. They then drilled down on a lot of components, why decisions may have been made, etc. Sort of like what you're saying.
Out of all the similar interviews I did last year for that type of round, I enjoyed that style the most. Rather than your typical "build me an {ecommerce site, social network, video streaming site, url shortener}".