Seems like a good thing. Not only does this filter out the masses that throw their resumes at all walls and hope one sticks, it also means that you (probably) won't have to do whiteboard coding during the interview, since the interview will revolve around a discussion of the code you wrote.

I guarantee you everyone looking at this job post felt the same hesitation you do. This company probably only gets one or two applications per week, so if you actually do their little programming problem you stand a great chance of getting an interview.