Perhaps, some of the time. I doubt it's the whole answer, though. I suspect that some of the answer is stress, and some is fakers, and some is people who have been in embedded and never had to do that. (I haven't for 10 years... but I'm sure I can still do it.)

why is it 'high-stress' ? desire to look good ? fear of being judged as a fool?

The ability to temporarily NOT GIVE A SHIT about what others think of you is a pretty valuable psychological/leadership indicator IMO.

I would want such folks, who may not be able to code up a binary-tree search, but would work through it in the same manner they would at home in pyjamas, to be team-leads or managers over time.

Should the company beer fridge be in the interview room?