Finding really good developers is tough... this is one interesting way to catch a driven smart person:
Your application is to build an small application! Wow... now that would really show what you can do. Most interviews / application processes include: talking, talking, and well more talking. Sometimes you'll be asked to write some code on the board. A lot of the time it's some obscure syntax question that doesn't really prove a whole lot other than you REALLY know C++ or Java or C#.
The other thing this type of job application does is get people that REALLY want to work there to apply. It probably won't work for every company, but for companies like Bindows that have a name for themselves, they can get away with this. I would be interested if anyone has done this before to blog about it or a hiring manager's experience with this kind of application process.
Non-partisan software developer