I think this question is more geared towards evaluating the level of sophistication that a technical organization has prior to having an interview or even apply

I think this question is more geared towards evaluating the level of sophistication that a technical organization has prior to having an interview or even applying (which can often take significant time). I've been at plenty of jobs where either new candidates (or existing employees) have talked a good game but when they finally show up to work, can't code their way out of a paper bag. The hope is that writing code during an interview helps prevent those situations. The other thing this questions tends to tell you is that you'll have a technical employee likely involved in the interview, which is good for all sorts of things from finding out about general work environment to getting details on the answers of the rest of the Joel questions like "what VCS?" and "build system?".