Why is the "bar" for hiring designed around code puzzles(leetcode)

I mean, the more senior you get the more focus you have on the stuff you describe - system design interviews, leadership interviews, etc. I know a few people that interviewed at Meta E6 for example, and they were explicitly told the leetcode interviews don't really matter as much and they are just there to make sure you can actually code. Imo Leetcode is fine for younger hires since at that point you are just looking for aptitude and/or someone who has the work ethic to grind. With that being said, Lyfts hiring practices is probably NOT why they are laying people off. This is a business issue. No amount of infrastructure or hackernews-style idealistic interviews would be able to fundamentally change their position in their business segment, especially if its just for hiring ICs. The people at lyft are plenty talented, contrary to what OP is saying.

These companies are too large and have to rely on hiring managers versus people who might be domain experts for the actual project (who are probably too busy with said project themselves to take time to vet 500 candidates). It's an unsolvable problem I think for a large company. For much smaller companies, maybe you'd get a lot fewer applicants and it would actually be realistic for a team member to take a week to do some hiring for their team. Of course as small companies get successful, they tend to grow, then they lose this hiring relevancy advantage.