Do these live coding interviews lead to better hires? I haven't noticed a difference between the teams at jobs I had to pass live coding interviews to get in and those that didn't.
I haven't worked at a FAANG, but I've heard they have such gruelling interviews. Is that how they build technically superior teams, or do they just have access to a strong candidate pool to begin with and use these tests to eliminate candidates to get the number they need?
Not sure how you would define better, but I can provide some anecdata.
At one of my previous jobs we counted the number of bugs that every dev introduced, so when you fix a bug you blame the problematic code (two clicks with a simple IDE addon), and the dev who wrote it gets a point in their statistic.
We used this feedback to prepare individual training. Many bugs were introduced due to not understanding the purpose of a module and why the code was written in a specific way, so we organized meetings to clear that up.
Those who did well in the coding interview had significantly fewer bugs during onboarding. However, over time most devs were able to reduce their bug count to roughly the same level (the problems weren't too complex, at some point you had seen it all).