I can understand that. "Take something that you do on a computer in a structured environment with constructive tools and then draw it on a whiteboard, while talking out loud, to a bunch of strangers." Impossible. Frankly, I can't write and talk at the same time, let alone try to code on the fly without a computer. I'm trying to imagine an interview for a guitarist where they say, "Why don't you walk up to a whiteboard and draw out how you'd play some song you've never heard of."
Good analogy. If you were a great guitarist, and you were looking to hire a great guitarist, that question might be reasonable. The two of you would start talking and pretty soon determine if you have a mutual fit.
Same thing with code. Maybe you think "can get the job done" is good enough. Maybe they expect symphonies, though. Right or wrong, you might not be a good fit. Heck, we expect serious CS from all our potential hires, and sometimes one stops the recruiting process because he figures we are weaker than him. Totally fair - it's not about getting the whiteboard problem right or wrong, it's about the talk between people who are going to potentially work together.