>What is the intrinsic advantage to having "local companies" to choose from in a world where every company you'd want to work for also offered remote positions?

The advantage is that on the path in-between now and the perfect future where all companies are remote-first( that we are not sure will ever happen), you will not be at a significant disadvantage when it comes to job prospects. I don't think that many people would be willing to heavily limit their job prospects (not even taking into account all the other advantages that come with living in a densely populated coastal city) while waiting for that "bright all-remote future" that may never come.