"Also, candidates might have different life circumstances. Someone who has a job or a family, or both, can’t afford to spend much time on the task." - Thank you for this - I was so heartened to read this! As a parent to a young child myself, when I first heard of these design challenges upon starting my new UX career, I was up in arms.

A child-free 20-year old who is between jobs, can afford to spend 18 hours per day on a challenge that I, as an older, full-time-employed parent, simply cannot. And, as you say, they rarely give a true idea of what the candidate is actually capable of in real life.

I'm also super happy to read that a confident candidate can and should reject design challenges - especially at inappropriate times during the interview process. I haven't even thought that this would be possible!

I' glad to report that, when I was interviewed for my current job (my first one in UX), design challenges never came up - instead, the team focussed on asking me about my process and figuring out whether I was a good culture fit. I'm having a great time working there and would happily recommend them to others.