In my experience, hackathons in larger companies are valves that sometimes release the pressure of things that people wanted to do, had been planning to do and thinking through for months before the hackathon was even scheduled, and finally are allowed to implement. These are binge-programming days/nights when the engineers finally don't need to work on tickets, and don't have to follow the due processes.

Corollary: if your company promises to have a hackathon one day, it's best to get prepared and have a bunch of good ideas well ahead of time.