Typically it's based on self reported domain expertise and general hiring interests that you express to the recruiter - to check your competence in what you claim your competence is. But overall the hiring process is slowly changing and now you're more likely to be targeting more specific area of the company, and then your interviewers have a high chance to later be ones during team matching calls. When I started interviewing, I went for a year of ~2 interviews a week and never saw anyone I'd know on the list of other interviewers. Now it's getting more and more likely (other interviewers for example also work at Research and we are interviewing candidates targeting Research).

In many cases they don't. I'm a PM at FAANG but the process is roughly similar in that you do a generalist interview loop. Most PMs work on consumer products so the questions are commonly stuff like [highly simplified for example purposes] "how would you grow the userbase of a new photo sharing app" or "Which is more important, growth or retention and why?"

I have some colleagues who are career enterprise and infrastructure PMs and they tell me it's very frustrating to have tons of very valuable expertise and then get asked a question about Tik Tok in an interview. I've also heard from SWE friends that they self-identify as a backend/infra engineer to the recruiter, only to show up to the interview and be asked to create a webpage from a mock and some specs. tl;dr FAANG has not figured this out yet.