Why do managers prefer ONSITE developers?
Why do most manager types prefer to physically monitor their team? When I go to get my oil changed, I don't have to get out and WATCH him do it.
The other part of it is slightly more understandable, which is to enable you to collaborate better with the other members of the team. Developers are often more likely to turn to someone they are sat near and bounce an idea off them than they are to write a question in an email, IM or chat room.
As a developer, you are not the customer, the people using your code are the customers. In the end its all about accountability and responsibility. If you take ownership of your code/issues, a good manager will see that and stop micromanaging.
I am not sure it is always justified, but I think most people feels safer to have people close if something goes wrong.