So far the answer I've worked out is:
Because its optimal solution to let talent flow through BigCo in SV. There is no domain or tech-stack specific stuff. So studying for the interview process allows the applicant to apply for multiple companies. At the same time it's a pretty hardcore process, so the company knows they are getting engineering talent that is a) smart and b) obedient.
For the rest of the world it absolutely doesn't make sense and that's why where I live, you don't see that style of interviews at all.
David Epstein's new book Range talked about academic research splitting domains into kind vs wicked. Kind learning domains are ones where "feedback links outcomes directly to the appropriate actions or judgments and is both accurate and plentiful", while wicked ones are "situations in which feedback in the form of out-comes of actions or observations is poor, misleading, or even missing". 
The hard parts of real-world software development are generally in the "wicked" bucket. Schoolwork and puzzle questions are both generally "kind" in the sense that there's a right answer and you're expected to figure it out. It's impossible to be too smug working on "wicked" problems because you get your ass kicked often enough to stay humble. But in "kind" domains it's quite easy to indulge one's desire to feel superior by dragging people through things you know well.
Personally, when I interview people I try to set things up so that there's no right answer; the goal is to see how well they get to good answers, and how well they collaborate during that process. I'd love to see more people do that.