I have had take home assignments like this. Amortized I still have spent far less time on them than Leetcode.

I've definitely had similar experiences with companies still at the "handful of employees" stage. If I'm actually interested in what they're doing, I enjoy the exercise. If I'm not actually interested, well it was an easy way to learn that before wasting their time or mine.

I've heard of (clever? sociopath?) executives that would do this periodically to get fresh perspectives at a cost of zero dollars. They had no intention of hiring any of the candidates.

There's a sucker born every minute...