Working in the same place, in my anecdotal experience, leads to better communication. A couple orders of magnitude better.
Face-to-face communication provides much higher "bandwidth" than text-based.
Face-to-face communication provides much higher "bandwidth" than text-based.
In person is much easier. There are shared experiences we can have. We can randomly bump into each other and have small reminder-type experiences. It's easier to get a sense of what kind of person we're working with, and that becomes an elevated sense of trust. This all matters and it's difficult to do remotely.
I've done both. I prefer onsite. Currently I'm remote and honestly it's a struggle, and regular onsite visits are a must to maintain those trust bonds.
Not everyone is willing to invest in that effort.
It would almost certainly be better if I were sitting in a chair at my office, but since I can't, remote work is the next best thing, and as long as both my boss and I are willing to work pretty damn hard to keep it going, it'll keep working.
But I can totally see how some teams would not want to go through the extra effort. I like to think I'm worth it, but my team got to figure that out while I worked on-site for some time before leaving (a year). It's hard to roll the dice on someone you don't know (a new hire).