It depends. In many cases it's impossible to give sufficient context to provide a real-world problem that will let the candidate show their understanding of algorithms and data structures. Sometimes it's necessary to ask these sorts of questions in isolation, without a concrete problem. Not least, sometimes a real world problem is better solved in a different way anyway, which subverts the intent.

Understand, most real world programming jobs don't need in-depth knowledge of algorithms and data structures. Most real world programming jobs are implementing the algorithms devised by someone else, using data structures that are "obviously" the right structure for the job. When companies are asking these sorts of questions they usually have a somewhat inflated view of their own importance. Either that, or those interviewing have no real idea about the work done by their programmers.

The very best interviewers, when using these questions, don't worry too much about the detail of the solution, but in the discussion of the pros, cons, benefits, drawbacks, and possible development of the code in context. Even with FizzBuzz there is much to be explored once a coder has written it.