It's multifaceted. It might be fine if you own a large enough home that you can have a dedicated working space, with a door.
Even without kids, I find it extremely difficult to work from home without a dedicated space. If I try to work from the living room, I end up doing living room things (like playing video games).
For some people, though, the idea of engineering your environment to change your behavior is either impractical or unheard of, which is what I think gives these people the general impression that "working effectively from home is impossible."
I love my kid crawling on me while I work, she sits on my lap and watches around or hug me a bit.
I work in the living room, my wife is there, my kid too. The desk is equipped for work, to be clear (good chair, screens etc.), I occasionally play games on it in the evenings (not often, to be fair) and I work in my "home clothes". Been doing this for over 10 years now.
I have my rules: if I don't work enough or I see I lose focus often, I'll work more hours. If I work too much, I'll work less the next day.
The other day I was even shocked realizing how much time people spend chatting at work, my day seemed more intense at home than their at the office.
To everyone its own. My style has been working great and a hug or cuddle from wife/kid is a great boost to my productivity!
For those types, maintaining their position means endlessly manufacturing superficial validation. It's a game of perception.
I see where they're coming from because it's still somewhat surreal to me, but I want to go home.
Which brings me to another point: there's something off about this. Most of the cost of living compensation appears to address the cost of real estate, which is artificially inflated in the first place.
Why do companies still do that if all they achieve is pumping the local housing prices even more?
Or worse: they don't like being at their own home, so the thought of staying there is terrifying.
That's at least what I've gathered from those I talked with.
I mean, if someone is saying that a 40min commute in high traffic still doesn't tip the balance in favour of remote work, then they apparently either really like being in the office, or really dislike staying home. Parents come to mind for the latter, but most of the people I've known who have 4+ children work remotely, so this doesn't add up.