I speak from personal experience. I failed my first FAANG style interview both because I had not prepared nor understood how white board interviews really work and because a huge subset of my skill had gotten rusty over the years. But when I first failed I was really upset and very quickly wrote off the entire process as a ridiculous test. Looking back I was a true negative and needed to brush up on a range of skills.
When I was a junior dev I spent nearly all my time studying programming, CS and software. But as I got more senior I definitely relaxed a bit on all of that and coasted more on the inertia of past successes than I should have. Yes I was good at my current job, and the ones before it, but those only represent a small subset of the skills a senior engineer should have. What made me a great engineer in one specific company allowed me to let other skills that I wasn't using decline a bit.
By being a bit more honest with myself I spent a long time getting back into the things that I used to love and also learned how to practice whiteboards. All my white board interviews after that were a success.
I think a huge push back by senior devs against these interviews is that they don't want to admit that, while they have gained a ton of valuable experience, they might not be as strong of a software engineer as they once were.
However, and I think this is the crux of the problem, you're not paying senior developers for that. I've never had to actually do any algorithm slinging on this job. The fanciest it usually gets is chaining some maps and filters.
On the other hand, I have had to do "rocket surgery" on critical path legacy code, write business logic in a maximally predictable and readable way, figure out how to land a non-backwards compatible change with no downtime, convince other teams to help with an initiative my team is leading, design an internal API, etc.
Doing that stuff requires experience, rigor, resourcefulness, and I'm sure you can come up with more "senior" traits. My personal complaint about whiteboard interviews, even systems design interviews, is that they only indirectly measure those traits.
From this perspective, a technical whiteboard interview is one of many tools. Interviews I give usually start with “so your boss asks you to solve problem X ... where do you start?”. Then I throw more and more problems at them (technical, organisational, etc) and see how they respond. “It’s in production and people start complaining that it’s slow. Where do you look first?”. “What problems do you foresee with this design down the line?”. “If you had $1m/yr budget to hire a team to scale this system, what would your ideal team look like? How would you spend the money?”. “An inexperienced team implements this and it’s buggy. What mistakes are you worried they might have made?”
Ultimately we get the traits we hire for. Being able to code (and debug!) is important. But I also want employees who I can delegate to, and trust that they’ll figure things out. I’ve been able to pass whiteboard interviews since second year uni. But I have not stopped learning, and the non technical skills I’ve gained since then are at least as important. Test for them.
However I can confidently say that it only took a few weeks of being thrown back in the mix to shake the rust off and get going again.
If I was an employer and could extend contracts at fairly low risk, I'd give devs with a strong resume and a demonstrable open-source library a chance - despite them being a bit shaky on the whiteboard.
Good on you for having the introspective skills and awareness to identify the problem and do something about it.
I mean, sure go ahead and prepare for interviewing, brush up on whatever you think will help. But if a company has a policy of consistently rejecting candidates based on testing of skills that are never used on the job, it sounds like there's a lot of room to improve that interview process.
If someone is effectively testing for these more difficult subject matters then it's quite possible that they themselves and other co-workers are competent in them (as they passed the same test).