I do think we have to distinguish two things though.

It's not really bad to ask someone to do a design session with them and "build their product with them from scratch" isn't inherently bad. That's actually pretty neat if you ask me.

What's bad is if there's only a single answer and that's whatever they actually built themselves, which might be a pile of thrown together startup poo that was never cleaned up. But you have the same problem with all sorts of "needless trivia" type questions.

And then do you really want to work at a company, where you can't have a proper "pros and cons of different approaches" type of discussion? If you got hired, you'd have those kinds of discussions with them on an ongoing basis. Bad on the company for letting that person do the hiring but they got what they deserved so to speak.

Just to make an analogy:

If they simply ding you for using 4 spaces coz they use 8, that's bad.

If they ask you why you use 4 spaces, they use 8, give them pros and cons and are there any other approaches and what are the pros and cons of those? That's a good interview so to speak. As an interviewer I would give bonus points if the candidate says something like "I used 4 spaces because I thought that's what you guys were probably using coz everyone's moved away from 8 spaces but secretly I love usings tabs and setting tabwidth to what I want but in reality it really really doesn't matter as long as it's consistent across the codebase as humans can get used to almost everything and this one isn't worth fighting over. Linters and formatters exist for a reason".

Engineering interviews in tech are arbitrary and biased by design.

This. No hire if, when asked an open-ended question, the candidate does not namedrop unprompted the components of the company's actual production tech stack. Clearly they're not knowledgeable about the engineering aspects of the job and are just bluffing their way through the interview process.