This is not a new thing.
This is an age old thing that you need less senior engineers compared to junior engineers.
What this has meant in bigger firms is that engineer can be at same level for long.
How this happens without frustrating the engineer is that next level bar is higher.
So in a way let's put it
If sde1 bar was x capabilities
Sde 2 bar was x++ Capabilities
Sde 3 bar was x++++ capabilities
Sde 4 bar was x++++++ capabilities
When the org realises that giving promotions like candies is not an option
Updated bar becomes like below
If sde1 bar - x capabilities
Sde 2 bar - x++++ Capabilities
Sde 3 bar - x++++++++ capabilities
Sde 4 bar - x++++++++++++ capabilities
Take any big company and you will see this