It’s akin to saying “Oh you’re a systems software engineer? Prove it by designing and implementing our entire system for us, we won’t pay you for it, we just want to know you can do it”.
For a company/hiring manager, one great candidate a month is far more valuable than a few dozen ones who aren't even close to matching the role. They're not saying "do the work for us", they're saying "if you want us to take your sourcing seriously, send us quality, not quantity."
To me it says "don't just shotgun me with every rando candidate you have - I'll give you one chance, make it count". It's exactly the sort of thing you might say to a pushy recruiter you met at the bar who wants in to your business. To succeed, they must a) have a good candidate and b) understand your business (so they know that candidate is right for you).
And I'd say there's an enormous difference between what a software engineer does (spend months or years designing and implementing a system that is for a single "customer") to what a recruiter does (spend 1 hours of conversations/emails in qualifying a candidate who can be shopped out to any of a number of customers.).