Many of us move to DC. However, 18F also has teams in San Francisco, Chicago, New York, Raleigh, Tuscon, Austin, Dayton, Philadelphia, Santa Barbara, Seattle, and Portland.
I had never lived in DC before joining USDS, but soon added a new favorite city to my list! I definitely never felt strung out to dry either.
Overall, it doesn't sound like you get strung out to dry in any particular way. Seems like it's mostly a "sacrifice" in the sense of putting your ordinary professional opportunities on pause for a little bit- although if the program becomes highly reputable, it could actually be good for you professionally.