So I have to ask: do you or have you worked at a FAANG with these systems? I may be wrong but I suspect you haven't, particularly if you're equating them with more traditional hierarchies.
The whole point of a system like this (and I have direct experience at Google and Facebook) is so you can go pretty far as purely as an IC. You're not forced to become a manager.
So at Google for example, new hires start as a T3 (T4 for PhDs). There is an expectation for growth up to T5, meaning technically you are meant to progress over time. When I was there this wasn't strictly enforced (eg I knew people who had been T4 for 5+ years) but it may vary from PA to PA or manager to manager and it may well have become stricter.
IIRC the general guidance was 2-3 years T3 to T4 another 2-3 years for T4 to T5.
At that point you can sit at T5 forever if that's what you want to do. People's desire to get promoted leads them to becoming managers because it is demonstrably easier to promoted from M1 (T5 equivalent) to M2 as en EM than it is from T5 to T6 as an IC.
These higher levels are really an indication of your organizational and technical impact and for this you really have to influence others. This is not being a people manager however.
But the point is that there's no "up or out" (beyond T5) like you may find at IBM or KPMG.
Now there are definite issues with Google's approach here and that's really a whole other topic. I just don't think your observations here adequately describe the FAANG career paths (IMHO).