the only reason was employers didn't have office space back then. i mean if you live only 25 minute walk or drive why not drive to work? working at home sucks afterwhile, you be at home 18 hours a day.
Productivity at home is based on the individual work ethic. After I retired, I worked as a Consultant for a federal agency, and worked from home. I found I was not taking breaks but working through lunch, and amazed when (a it ws past 5 pm and (b) I suffered eye strain from the computer monitor. Contrast that with the federal employees also working from home, who I could never reach on the taxpayer-provided cell phones, they responded to emails the next day, and in the office they spent two hours at lunch to go shopping.
YAHOO! has serious and creative professional employees, unlike the government, and getting them out of the home office is not only healthy from a psychological standpoint, but improves accessibility and communication - essential for their work. MM made a brave but excellent decision, and I hope other companies follow.