It's a covert form of ageism. The more questions you ask that are like undergraduate puzzles and less like real world situations, the more likely it is that your "objective" recruitment process will filter for recent graduates.
You don't hand a car engineer manufacturing tools on day one of making a car, you need him to produce a design/blueprint first.
Really?
Let's be clear: whiteboards are a fine tool for design, problem analysis, architecture, etc. etc. People take issue with "write me bubble sort up here on this whiteboard."
The implementation part of "software engineer" very often is much easier and sometimes even trivial when compare to the design/architecture of the entire system. Implementation is also very easy to improve upon and refactor out, if you have a good design to begin with.