Do kettlebell swings build strength like a squat or deadlift would?
No. Kettlebell swings are a different movement that seems to have a lot of carryover to the deadlift but kettlebell swings shouldn't be considered a complete, long-term substitute for the barbell deadlift or squat for someone interested in improving their performance in the deadlift or squat.
What would be the benefit of doing them instead of an exercise you could load heavier?
You don't do swings instead of deadlifts or squats. You use swings to further your progress toward your goals. Swings can make a great addition to a barbell program - many people have reported their deadlift one-rep maximum go up when they've added swings as an assistance exercise.
An experienced powerlifter might make progress on his deadlift or squat by having a cycle of 6-12 weeks during which he doesn't deadlift or squat but only swings. The progress, however, wouldn't be visible until the swing cycle was finished and a new powerlifting cycle started and finished.
And I notice swings are usually done for higher reps, is this optimal for strength development?
There is much we don't understand about many things, exercise and lifting included. We call this the "what the heck" effect. The evidence is undeniable that swings help deadlifts, and the evidence is also undeniable in the other direction, that deadlifts can help with swing performance. Why? I think about it but, in the end, what matters is what works, no?
Hope that's helpful to you.
StrongFirst Team Leader
Multiple AAU and WNPF deadlift age/weight-group national and world record holder