I understand this encourages an imperfect system, but I would have really appreciated this as an undergraduate who didn't understand how interviews worked.
While the system is admittedly problematic, does it really come as a surprise that for extremely competitive jobs at the entry level, such artificial hurdles need to be used to filter the plethora of black-box applicants? I can't speak to more senior roles, but for entry-level, this only seems like a natural (and practical) response. It happens everywhere, not just CS:
For any competitive school admissions, SAT/LSAT/MCAT what-have-you are all poor indicators of student performance, and boil down to trainable tests.
In finance (both quant finance/and positions like sell side banking, private equity), people constantly practice math/financial modeling/accounting, for interviews. Many of the more selective quant shops (for undergrad hiring, I should mention) have much more difficult problems than MS/GOOG/AMZN technical interviews, and I would argue the type of competition level math/probability are just as unrelated to their jobs.
In management consulting, people spend hundreds of hours practicing for case study interviews. Just search consulting interview prep, and you'll find an egregious number of prep companies.
Some people brought up law and medicine. First, I don't think the grueling nature of the medicine certification is even close to what it takes to be an entry level developer. In law, while "technical" interviews are rare, often times employers filter you by much cruder means: pedigree (both the school you attend, and at top echelon law firms, clerkship status, and top-top grades within those schools). Is that any better?
The common denominator here is the high demand for all of these schools/jobs, and the problem always seems to come down to, how to optimally recruit -given- resource constraints. Maybe I'm cynical but almost any reasonable entry-level interview can be "gamed" or trained for, and most firms are either small and lack resources to extensively evaluate their applicants holistically, especially if they're only in undergrad, or they are large and get way too many applicants, so some proxy is necessary.