I think you're making too much of the example of the candidate crying. That is indeed an outlier case, not the norm. But the crying case is an undeniable sign that job candidates can get extremely anxious during an interview, in a way that affects their performance. The issue isn't "breakdowns" per se, the issue is that coding tests are testing anxiety level rather than skill level. Ironically, most job candidates are in fact "controlling their emotions", as you say: they may show no outward sign of breakdown or panic, but on the inside, their mind and stomach are churning heavily, and this makes it difficult to perform at their normal level. Everyone is trying to act calm and collected during an interview, but often it's merely an act, and they're actually not calm and collected at all. What you perceive from the outside as incompetence may be a whole different story on the inside for the candidate. https://www.engr.ncsu.edu/news/2020/11/11/tech-sector-job-in...
Anxiety isn't all or nothing. There's a wide spectrum between totally calm and crying breakdown. When there's a crying breakdown, it's easy to recognize, but anxiety is not so easy to recognize if there's not a breakdown.
> I've done a lot of interviews and nobody ever mentioned having to prepare for them.
Why would they mention it, even if they did prepare?
> That idea seems to be a relatively recent idea (last ~10 years or so) and is probably a result of so many people competing for very highly paid jobs at a small number of firms.
Regardless, we're living in the present now, under current conditions, not living in the past, so for the purposes of getting a job, it doesn't really matter when the idea originated.