Probably you're just oversimplifying for brevity or something. But I've worked at plenty of projects where the team was sitting together, the product was a monolith, and it was still a problem. Coordination becomes easier, sitting together, but the need to coordinate, or the level with which people start "stepping on each other's toes" (code-wise) isn't reduced by it. I'm not saying all monoliths are bad, or that you would never want one, but when it becomes a problem, there's little consolation in sitting together.