When a candidate bombs an interview, I don't think "wow, what a shitty engineer, how are they even employed?" I think, "wow, interviewing sucks."
That's the difference between "that interview didn't go well" and "you are a bad programmer." One's a major blow to self confidence, and the other's a bummer. It's also a helpful mindset shift for both the interviewer and the interviewee: both of us are working together to achieve the goal of proving your capabilities. My job is to give you as many opportunities as possible to do so.
I think it's because most interviewers consider people that failed their interview bad programmers.