First and probably primarily is security holes from supporting remote employees. Yahoo's email seems to have been broadly hacked, so much spam from address books of yahoo addresses. As a CEO, decisive action is made when no one else will speak of the elephant in the room, or assumptions need to be broken to progress.
Second, I have done lots of team work as well as remote work.. the physical interface of people is important for synergy. The problems I have solved by simply walking around the workplace and networking people who sit within 10m of each other are beyond counting.
Thirdly, Yahoo must really be in trouble and this is a sincere attempt to save it. Perhaps time to pay for their premium service.. They could use the cash, and i could use downloading my old emails.
The revenge effect from this decision could be nasty tho.. Security could get worse since some won't go and skills won't get transferred. People who worked remotely may not integrate well and may carry resentment into the workplace and the attempt to save it just might work just enough to drag the brand even lower. Good luck Yahoo! I for one am rooting for you.