I agree that it is an awful mindset, but it's also true that they should not be given a task that they can barely do. Instead the formerly mentioned great devs should mentor over them, so they can become similarly good.

That is the mindset of upper management at many companies. But if your upper management wants miracles performed in impossible schedules with too few people, there is no room for a junior dev. In fact most of the junior devs at where I work are cheap outsourced contractors, not junior employees, as impossible projects also need to be done with limited budgets. Not of this makes sense to me.

Thats true if you have no choice.

But If you can hire great devs that already comes with the experience, required skill and you can pay for it, then why not?

If I'm a dev who is willing to put the time outside work to improve myself, wouldn't that put me in advantage when applying for job, compared to people who are not willing to put the time?

This is such a critical point. So many problems that plague the industry tie back to this. Lack of company investment in juniors leads to greater job hopping, which leads to building things based on bleeding edge fads to pad resumes, which leads to ever increasing title inflation, NIH syndrome, or cargo culting, which leads to the brutal churn that most everyone hates and wastes tons of man hours instead of just maintaining and improving existing software and teams.

How so ? If utterly incapable people being hired as seniors, isn't that failure in evaluating candidate ?

Senior/junior title designation shouldn't have much importance when evaluating candidate anyway, rather on what they can actually do or provide.