It depends on what your “world” is. If I’m being hired to write yet another software as a service CRUD app, then algorithm questions aren’t the “real world”. But, when I was being hired to do low level cross platform C without any third party libraries that we didn’t write ourselves or to maintain a compiler - algorithm type questions were appropriate.

In fact, we were writing custom document creation software and outputting to industrial printers at the first job where we were doing a lot of text processing.