For today's knowledge worker, location is immaterial. Technology makes it so.
I've personally worked for a large corporation from my basement office for about 4 months straight. One morning I worked on a U.S. problem with someone from India and someone from Ireland, all from my home in Canada. Cool.
But you can't multitask with home life. Switching the laundry, starting dinner, checking on the kids, even switching the CD in the hard drive slows you down.
At the same time, the networks need to be continually fast, continually responsive. Otherwise, the multitasking starts during the 'wait times'.
And the monitoring software slows things down.
EIther trust or don't trust: Is the work getting done ?
Clear and conscious breaks are okay. And everybody's gotta get some water, and then everybody's gotta pee. The same thing happens at the official office.
I usually worked a bit longer each day to make up for the inevitable trips to the fridge, or to get some fresh air.
Working from home is not for every job, and it's not for everyone. But it can be effective in the right situations.
Oh yeah... it also means you weren't driving on the roads....