Maybe a little different, but having a lot of physical desk space is still very important IMO. It feels great to have lots of desk space, it helps carve out more privacy since there are less possible closer places other people's desks can occupy. I dislike when people peek around my screen just because it is convenient to.
There's definitely research that shows more resolution and screen real estate are helpful for productivity. And, of course, more of our work does happen on screen now than in the 70s.
Still, I'm personally happier with more desk space. We still use paper all the time. Tufte points out in one of his books that humans are better at spatial comparisons than time-based comparisons, hence his fetish for data density, and mine for lots of screen and desk real estate.
I expect this to be different now, and possibly more dependent on screen space than on physical desk space.
I think you'll often see workers getting this situation when they really need to be productive by commandeering a conference room and shutting the door. But, it makes sense to provide it for teams in general, in my opinion.
There have been a couple big projects where we flew in the remote people just to get the whole team in a room together. So it's not only the workers that know this; management does as well or they wouldn't approve the travel budget.