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Every interview process will inherently be a flawed one. Having hired several hundred engineers in my career, I believe that it is essential to try to create an interview environment where candidates feel they are given the best possible chance at showing their potential.
There's plenty of bias in engineering already that puts women, people of color and minorities at a disadvantage - and this shows through how most companies approach engineering hiring.
In one of my previous roles, we looked at who made it though to subsequent interview rounds and found that we favored candidates with very similar backgrounds to our own. More than we had thought, as it turns out, than we believed going into the analysis. Our solution to reducing this bias up front was to design take home assignments that tried to resemble the day to day job as much as possible, and with measurable criteria for what we wanted candidates to cover to determine their experience and skill.
It took a tremendous amount of work to get this process right, with a number of iterations to figure out the right balance for how much time a candidate should spend on an assignment and how much of day to day work our engineers should allocate to evaluating candidates.
Over the course of two years, we were able to achieve an almost equal split between women and men being hired into our engineering organization, less employee churn and a generally more vibrant workplace.
Take home assessments aren't a silver bullet, and they don't address every piece of the hiring puzzle. I do, however, believe that they are much better positioned to help interviewees perform at their best in an environment they feel comfortable in. This is especially true for people who today are less represented in software engineering roles.
At the end of the day, take home assignments are one part of a larger toolbox of tools companies must make use of to hire great people. Just like any other approach, take homes can be abused or misused, but I think they deserve more attention than most hiring managers give them.
Use them, or don't. Just make sure you hold yourself accountable to your own bias and try to reduce it so you don't miss out on great talent that don't fit your predefined view of what a great candidate looks like.