The value of the challenges over Github reviews are 1) allows us to anonymize the process, 2) eases level-setting and adjustment across the reviewers to prevent a "hard grader" throwing off the overall review, and 3) doesn't bias against those whose workplaces did not allow or encourage open source contributions. It gives us a consistent baseline as a starting point.
GitHub (or other open source code contributions) can come into play after the initial code challenge portion is passed and can be a great point of discussion in the interviews. We're definitely advocates for open source, especially in terms of making our work on behalf the people of America available to them in source format as much as possible.
For us, at least, we've found having a consistent first step to the recruiting process to be very beneficial in terms of giving everyone an equal starting point for consideration. It's proven difficult to come up with a method for weighing side projects versus open sourced work projects versus contributions to existing projects in a manner that has felt consistent and fair to candidates.