Earlier quoted context omitted.
L7/L8 positions are comparable to the director of a department with 100+ people underneath in a large company or the owners/executives at a smaller company. Of course people in these positions don't code, they couldn't be further away from developers. It's fine that FAANG want heads who can code AND run a department but it shouldn't come as a surprise that candidates don't match that.
There are different ladders with different hiring expectations (e.g. SWE and Eng manager). Regardless, a lot of leeway is given for code rustiness at these levels, but design skills are still important. Algorithmic skills are often still required (e.g. imagine you are hiring a senior dev into a Search Infrastructure group, do you want them to be rusty on algorithms?).
That's precisely the sort of things I hire for and I have mixed feeling about that :)
First, infrastructure has a bazillion technical things to deal with between OS, systems, architecture, networking, hardware. Most of these are not even expected from software engineers so it seems disingenuous to make them a hard requirement for a management/lead position.
Second, it's irrelevant to the job. Senior candidates will be mentoring younger developers, developing the team and the department, coordinating and working with other teams (potentially hostile), taking architecture decisions a thousand step above coding a loop, handling hiring and promotions, taking care of budgets and schedules, etc... they should be evaluated on that.
People can't be perfect on technical aspects and soft skills and management. That's an impossible high bar.
After seeing tens of candidates, some of whom would certainly have done the job just fine, yet all got rejected for one minor thing or another. I have mixed feelings about the interview process. Yes, being rusty on algorithms should not be a blocker for some roles.