When I did my BSc and MSc in physics almost all my exams were oral just like you described. Latter I did a PhD in a different university where oral exams were never practiced. My PhD supervisor told me that part of it is because of the scaling issue, but another very interesting point he made is that it is about cultural interpretation of fairness.

In my BSc and MSc we were all basically locals who are in all aspects about the same except from the aptitude to study. In the university where I did my PhD there were much more divisions (aka diversity) in which every oral examiner would need to navigate so one group does not feel to be made preferential over another.