I'd say asking a candidate to implement levenshtein distance in an interview (probably not the best question to ask I'd say) is more about creating a level playing field for candidates who might not have "attended and spoken at relevant conferences" or have "a bunch of apps doing mission-critical work in production", but might be thoroughly productive and successful at XCorp nonetheless.

In fact, a candidate might have experience in something completely different but maybe just as impressive - publishing a paper on an optimization for an algorithm, creating a programming language, submitting Linux kernel patches, etc. How would one differentiate a candidate like that with someone with "a list of public repositories on GitHub as long as your arm"?