Having gone through one of these processes (not with Google, but another big 4 company), I'm quite sure this happens. The CS fundamentals might be easy to test for, but they've had very little impact on real world problems I needed to solve in my career. For someone who's a bit farther away from college and doesn't come from a rote memorization culture (which IMHO is inherently bad for problem solving), this serves as a screening mechanism without actually testing for what's useful on the job.
I've been quite successful at interviews where they ask me to solve a little take-home project. In that case the rote memorizers who get through the Google process usually don't shine, because they're not able to put these things together properly. Recent CS grads still do well on those if they're competent.