Ignoring my personal feelings of how unhealthy I think this is for them in the long run, I just simply don't want to feel like I'm competing with them. And yeah not all workplaces feel like a competition, but in my experience the places where you constantly hear "I was up until 10 fixing that bug, but I finally solved it." "Nice work, rockstar!" do feel very competitive internally.
Also as someone with lots of anxiety (which I feel is somewhat common among developers) it really helps to hear that taking reasonable hours or a vacation is not only allowed, but encouraged. I worked at a place that switched to "unlimited vacation", but the process for getting it approved was so stressful that the majority of the developers didn't take a vacation that year.
But I don't see anything wrong with praising more output under the right circumstances. Everything ebbs and flows. As an IC there are times I go 3-4 days without a single commit. And there are times I have commits for 12 days straight because I'm on a roll.
I've been fighting for an "unlimited with minimum" vacation policy for the developers at my current job for a while now. It was fight to get the base increased from 2 weeks to 3, and the system doesn't allow negative PTO balances, which seems kind of draconian to me. But I'd love to see my coworkers taking 4-5 weeks a year.
This is also why I actively encourage taking time as needed and being flexible when it comes to taking time off to take care of things during the day. It's a non-issue. Finally, it's why I pay attention to taking vacations. I actively encourage it. Often people feel the pressure of deadlines which are always looming. Through my actions, they don't feel as if they can never take time off.
Yes, I can see how you might feel if someone is watching your work hours. But it's not a single thing. It's a continuous effort and comes from a relationship you develop with the people you manage.
When I ask people why they are still working at a certain time, they know why I'm asking. The net result has been really positive for my team.