I worked at a company with branches in multiple cities. My team consisted of people living in different cities, so we only communicated with each other by Skype

I worked at a company with branches in multiple cities. My team consisted of people living in different cities, so we only communicated with each other by Skype... and it worked okay. Yet somehow the idea of working from home was unpopular with management (this was before COVID-19), because "it is important for employees to interact with each other in person". I think it is all just rationalizations and prejudices. Sometimes teams work better, sometimes they work worse, and the distance is just one of many possible factors.