I don't think its limited just to graduates: Before I went to university I applied for what was a minimum wage job with a new printing company. I already had quite a lot of experience with all the software from a previous stint when I was self employed... More experience, it turned out, than the two young women who had started this company.... It was embarrassing; they just didn't have a clue!
And as for people leaving their degree and past job history of their CV. Yes it does happen. Again before I went to uni, I applied for a job with a large chain of national bakers famous for their greasy pies... just with GCSEs and A-Levels, they told me they could not hire me because I was over qualified!!
I also had the misfortune of going to the job centre before uni... they told me to take ALL my A-levels off, not mention the specific subjects or grades (which were As) for GCSEs. They also told me to take off my past self-employed businesses off. The job centre only knows how to find menial minimum wage work so are the experts at dumming down CVs.
My favourite was: "don't put on you have a GCSE in French... they'll think you can speak French" .
-errrr... .I can.... :/
At the end of the day I guess it just underlines the importance of adapting your CV for each job you apply for. If you're going for a job that a monkey could do... look like a monkey...