Do these interview practices really make it difficult to eat? AFAICT they make it difficult to work at prestige companies. Companies that are prestigious in the first place due to their selectivity and its trappings, i.e. if it were easy to get work there, no one would care about working there in particular.

Everywhere cargo-cults this fashion now, even online greeting card companies and govt jobs. They are all chasing the top % with market wages, no matter how rudimentary the work. Hence the shortage.