People graduate from high school who are functionally illiterate. Similarly, people graduate from CS programs who are functionally incompetent.
I've interviewed many people who can talk the talk, have an impressive resume, can talk details about their projects... But fail a simple coding question. My go-to phone screen question is to find the common elements from two lists of integers, and half the candidates can't do it in better than O(n^2). I'm not even looking for the perfect solution, just something that is better than brute-force.
It's the "do original work" that is the hardest for many people. They can modify existing systems, plumb together interfaces, etc. without a problem, but given a fresh problem and a blank sheet of paper they are stuck.
I've found the same people are also weak in their fundamentals...