time limits put an upper bound on how long youre spending on it which is good for a lot of people. ive given take home tests and some people clearly put more time on it than we expected.
as an applicant, ive refused takehomes that were auto-sent on receiving the application, but if its after a phone call with the hiring manager or engineer its not so bad. but then, i did end up having to defend why i didnt do a bunch of parts ancillary to the assignment - 'why didnt you build a config loading system?' 'uh cause i timeboxed it and that gives you fairly little signal compared to the business logic'