They clearly don't help to evaluate organizational skills, but no one said you should only have these interviews. I'm guessing no company does only leetcode-style interviews, at least I don't know of any.
> I have found that there is zero overlap between people doing well in leetcode interviews, and hires doing well in their first year.
You could only evaluate this correlation among people who did pass your leetcode interviews and were thus beyond a certain bar, unless I'm missing something. The question is whether selecting according to this bar is useful, but it doesn't look like you evaluated this. Or did you do leetcode interviews and just hired anyone regardless of how they performed in them? I agree with you that beyond a certain bar, the signal becomes lesser. But being able to tell whether a candidate can write a for loop is a pretty strong (anti-)indicator for many SWE jobs.
> The notion here is that some company, at some point in time, started putting their applicants through these kind of puzzles, and it became trendy.
I agree that there's probably some of that. But companies are made of people, and if so many are still doing that decades now after they started and don't see a competitive advantage in switching, maybe it's the best they've been able to come up with, given their constraints. Again, there's real money to be made for those coming up with an alternative that'd scale and perform better.