On the other hand, it is not necessary for a company to hire every good developer that walks through their door. What they need to do is to hire enough people and try to optimise their good to not-so-good ratio. Even if their process would not select you (a good developer), it does not mean that it is not a good process.
The original question asked whether this was slanted towards younger developers. Although I don't interview people this way, I would expect that good senior developers could pull an interesting kata out of their back pocket as long as they had enough warning to set up their development environment ahead of time. Hell, I'm quite sure I could fill up a couple of hours with FizzBuzz variations and still come away giving a good impression.
Basically, when interviewing for junior developers, I want to see if they can code and if they can take direction. So it's cool to write any stupid code and then help them explore it. I'm trying to find out if they can listen to criticism and if they can utilise that criticism to improve their code.
For senior developers I want a lot more. I want some evidence that they have spent their time thinking about software. I want to see their opinions, but more than that, I want them to be able to show why their opinions are worth listening to. When a senior dev comes on my team, they are not there just to write code. They are there to inspire others to greater heights.
If you quickly revealed to me how little you care about some random toy project, I would try to help you see the point. It's not about the toy project. That project is only a medium for communication. If you still couldn't see the point, then I would probably conclude that you were not right for our team. That might be my loss, but as long as my filter selects enough good people it's not really a big problem for me.