I think it's reasonable if one's applying as a full-stack developer, the app is something like a simple TODO list that isn't anything they'd actually use, and there isn't a high expectation of polish. Few hours of work at most, not days, and definitely not a first-interview thing. Expecting you to host it yourself is definitely unreasonable: they can build and run it themselves if they care that much, but eyeballing the source ought to be good enough in most cases.

It's only ok if they pay you for your time.