I've been an AC (the person who manages the reviewing process and translates reviews into accept/reject decisions) at ICML and similar conferences a few times. In my experience, grad students tend to be pretty good reviewers. They have more time, they are less jaded, and they are keener to do a good job. Senior people are more likely to have the deep and broad field knowledge to accurately place a paper's value, but they are also more likely to write a short shallow review and move on. I think the worst reviews I've seen have been from senior people.

It's usually not "noob" students. Big conferences require reviewers to have at least one (usually more) published paper in major venues. For students, this usually means they went through the process of being the first author on a few papers.

Because someone has to do it. Conference submissions have ballooned as the field itself has ballooned.

Whats your suggestion?

It's better if nobody does it than to send it to the randomizer.

Ok but you need peer reviewed publications to graduate with a PhD.

And if you retort that the whole academic system is obsolete, well, it still carries a lot of prestige and legitimacy that makes politicians interested in maintaining it, so it's not going anywhere soon.