Personally, I prefer being given a small project to complete (on my own time, not while someone remotely watches me code on a screen) that demonstrates my ability to do the type of work the position calls for. Being quizzed on the difference between absolute and relative positioning or solving a timed algorithm doesn’t show what I’m really capable of.
The bit about new grads typically being the only ones to solve a problem really gets at one of the core issues. Companies are focusing more and more on “diversity,” and a large part of this means reaching out to those who got into tech through non-traditional paths a bit later in life. However, it goes further than just reaching out and requires evaluating us in a way that looks at what we can do. No, we didn’t write papers on binary search trees or the big O. Yes, we can build out a React application in an afternoon and learn a new language in a week.