I wish companies would stop saying this shit. The honest translation is usually "We have no idea what it would mean to run a remote team and there's so much on our plates right now that we're not putting any energy into considering it"
Which is fine! I'd much rather people say that than this "It's impossible to be as awesome as we are without sitting next to each-other" bullshit. It has the downside of sending the message to others that you might know what you're talking about, via actual experience.