I agree that code challenges aren't ideal. But we've been struggling with parsing resumes and titles to identify the competency of developers. Our current coding challenge isn't super hard and based on the type of code you'd see in our product. It asks you to read a simple javascript function, explain it, and then implement new functionality that can built by refactoring the existing method. It's about 20 lines of code and 50 lines of documentation. You can use any IDE that you like.
We've had many candidates that look strong on paper (3+ years of experience, senior titles, etc) come in and struggle. Struggles ranged from basic code literacy (think for loop to traverse a nested json object) to basic programming like writing a function. We've especially noticed this more with coders coming from purely a javascript and front-end background (React/Angular, etc). They understand control structures like if/else but struggle with loops, setting variables, and basic higher level concepts like breaking a problem into smaller functions.
My philosophy is for junior candidates, any level of competency is ok. Strong mentoring and experience on job usually can allow anyone to thrive and so you can prioritize soft skills and culture. But for more advanced roles, I don't know, it's hard to parse out the quality candidates without having some sort of technical interview. Definitely would love to hear how other's learning and experiences.