I go back and forth about how I feel about doing heavy algorithm/data-structure stuff in interviews. On the one hand, I have never once written any kind of sort algorithm or LRU cache by hand for a production system, because why would I? Pretty much every language's standard library has a fairly-optimized sort and caching thing built in, and if they don't then there's still probably a million outside libraries to do it for me.
On the other hand, I genuinely do feel theory is really important. While not knowing the minutia of a tim-sort doesn't indicate that you'll be a bad engineer, not knowing the runtime efficiency of a sort can lead to some really awful code. Not knowing when to use a hash table instead of a nested-for loop can be a sign that you don't really know what you're doing, and not knowing some rough theory on concurrency indicates that I might be stuck debugging your race conditions or deadlock.
I try to not be a complete jerk and I won't do stuff like give out an NP-complete problem (which an interviewer gave me once), nor will I ask for intimate details of how one would implement CSP, but I do tend to focus on theory-heavy questions more than my peers, but I try to give a fairly-generous amount of hints so that people don't get too stuck.
On the other hand, I genuinely do feel theory is really important. While not knowing the minutia of a tim-sort doesn't indicate that you'll be a bad engineer, not knowing the runtime efficiency of a sort can lead to some really awful code. Not knowing when to use a hash table instead of a nested-for loop can be a sign that you don't really know what you're doing, and not knowing some rough theory on concurrency indicates that I might be stuck debugging your race conditions or deadlock.
I try to not be a complete jerk and I won't do stuff like give out an NP-complete problem (which an interviewer gave me once), nor will I ask for intimate details of how one would implement CSP, but I do tend to focus on theory-heavy questions more than my peers, but I try to give a fairly-generous amount of hints so that people don't get too stuck.