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Do universities hire graduates from lesser universities

Recently, someone analyzed computer science professors at top universities and found that over half of the professors at the top 51 universities graduated from a top 10 university. Others have also brought this up. From my personal observations, most schools do hire graduates from better ranked schools.

  1. Is this because of the competitive job market? We have so many good applicants, we have to narrow it down some how!
  2. Or is it simply that these schools produce the most PhDs?
  3. Has this always been the case?
  4. How rare are exceptions to this? I know of a few people who graduated from a top 75 school and got hired at a top 50 school. But what about bigger gaps? The top 10 schools seem to just swap graduates, do they ever hire from a 50+ ranked school?

Update 2018: I have accepted a tenure-track position at a top 75 department at an R1 university immediately after graduating from an unranked department at an R2 university. It does happen!

This may or may not generalize to other fields and countries.