System Design questions are now regular part of the interview process at various organizations. They test the individuals ability to design, visualize, simulate real world scenarios, use correct data structures, apply design patterns. These questions are generally open ended. Usually the interviewer asks candidates to design system using white board. It may even be kind of pair programming where the interviewer also gives his inputs. The depth of the design solution needed depends on the interviewer. Some interviewer might be satisfied if only classes involved and the design overview is explained. While some may go into implementation details a lot.
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