Honest question, is leetcode tests an actual failure from the recruiting company perspective?
Sure, it means that from time to time you will reject people like the Homebrew creator. And it also means the recruiting process now sucks for the applicant.
But in a context where it's extremely tricky to evaluate an applicant during the short span of an interview, it seems honestly like the least "arbitrary/trusting your vibes" recruiting method we have now which could be deployed at a large scale.
At least, you are getting people you know had the ability to remember this stuff, and also were willing to put in the effort to learn it.
Leetcode is fine for large companies where software engineering is essentially a factory worker position - you take ticket in, produce code out. Engineers have very little say in the product or business.
In this situation, things like soft skills, thinking outside the box, etc are actually a downside. Rejecting the Homebrew creator is a desirable outcome in that case - because said creator is unlikely put up with "ticket factory" work.
If you legitimately need a "ticket to code" machine, Leetcode is the right approach. Just that most non-FAANG businesses need more than just "ticket to code", and then Leetcode becomes the wrong answer.