You're right. But a lot of people that are good coders code for fun. But you're also right that not all those people push their code into public repositories. The same is true for mechanical engineers. They're almost always makers. Fixing stuff at home or doing projects for fun. Not always, but there's a strong correlation.

But getting people to explain projects they did and challenges they faced can still be done. We do it with people who have worked on classified stuff all the time. If you're an expert it's hard for people to bullshit you about your domain expertise. Leet code is no different. It doesn't test if you really know the stuff, it tests how well you can memorize and do work that is marginally beneficial in order to make your boss happy. Maybe that's what you want. But it won't get you the best engineers.