It’s only common for government jobs and isn’t universal there either. Many government jobs in the US receive multiple different types of leave concurrently. So for example you might accrue 12 hrs of vacation leave per month, 8 hrs of sick leave, and have a floating holiday of 8 hrs per year. If you reach a certain cap (say 100 hrs) the vacation leave rolls over into sick leave.

If you quit your job they have to pay out the vacation leave but not sick leave.

The result is that many government employees, with long careers, historically have tons of sick leave they aren’t using (as in several hundred hours). When someone has a life event it’s not uncommon for coworkers to donate some of their leave to the person (think having a baby or a cancer diagnosis).

You can of course take more leave then you have sick days with FMLA, but they will be unpaid. Sick leave that you have when you become eligible for pension retirement typically can apply to your retirement (potentially allowing you to retire earlier), but you still have to qualify for retirement first.

If you’re 3 years from retiring and you can’t qualify for early retirement with your leave, then you might have hundreds of hours you’re not going to be able to use.