I've always had the impression that it's just an easier way of dealing with potential hires but by no means the only way. If the company you are applying to is

I've always had the impression that it's just an easier way of dealing with potential hires but by no means the only way. If the company you are applying to is an active contributor to OSS then it would probably be more important as a gauge of some workflow they'd like to see. Maybe I'm wrong though– I've never gone through that process myself.