Assuming that average hourly rate is $50, the developer spends $100 of his time doing the test and thus showing commitment to reach an agreement about the job. The company, on the other hand, spends nothing and thus makes no commitment whatsoever.
The proposition is not atractive in any way unless you are completely desperate.
So, the company is basically selecting for the worst developers.
Is there any point I've missed?
And obviously there will be some costs to the company, the test didn't develop itself, and there is likely a developer reviewing the code after completion.
In this case the developer is in a different city, the test appears to be designed to see if it is worthwhile to bring him in for further interview.
Developing test beforehand requires no commitment ($0) to particular applicant. There's no commitment.
As for reviewing, I've seen A/B/C/D tests out there. These can be evaluated automatically. So once again, no commitment.
Now, the point is than anyone -- if there's an option -- prefers situation where there's at least some commitment from the other side. Thus, the guys with automated tests are going to hire only developers which have no other choice. It looks like they are shooting themselves in the foot.