That assumption isn't being made at all. That's why it says with sufficient throughput of candidates. If you need to hire 100 people, have 10,000 candidates, 1,000 of whom are qualified, and a 90% false negative rate, you'll get the 100 true positives you need, while leaving 900 well-qualified people pissed off. The process is bad for most of the candidates, but works fine for the company doing the hiring.
The problem comes when smaller companies that don't have the same high rate of new applicants use the same process and then complain they can't find anyone.
> "Their ability to filter out 'those who can't code' in an efficient manor while sacrificing a small amount"
This is the assumption I was referring to, that the "sacrifice" is small. It's suggesting that the false-negative rate for LeetCode challenges is small, and I'd argue it's actually quite high -- as you also suggest (your rate is 90%).
The problem comes when smaller companies that don't have the same high rate of new applicants use the same process and then complain they can't find anyone.