At low student counts, like 20, (think specialist niche elective master's courses, not the huge bachelor's courses) it's perceived by profs as more efficient in fact than the ordeal of organizing a written exam.

With an oral exam, the prof blocks off 3 days or so, with ~8 students per day and it's done. It's not a huge additional effort compared to all the effort of giving the course over the full semester anyway.

An added, though minor benefit is that the professor might decide to offer a student assistant job to someone who performs well, because it's much easier to judge who is actually good in an oral exam vs in written. There's a reason that job interviews aren't just tests filled out on paper but involve personal interactions.