In my industry, practical interviews are very common, but they’re not always reliable. I can get as much from asking someone about their process and being talked through a case study they’ve chosen, as giving them a practical exercise to perform on the spot. I’d usually do both.
I’m not disagreeing with the overall inefficiency and frustration of the whole process, I’ve felt it on both sides. It’s messy - bad or overstretched HR teams, slow managers, unclear budgets, poor choice of tech platforms…