The answer is it depends - both on the student and the culture of the department.
There are of course some situations where working from home is impossible - graduate programs that are heavily lab based come to mind. Below is a summarization of my thoughts from a more data analysis driven field, having done both.
- Lots of departments these days don't have lots of graduate student space. While some labs might have dedicated bench space, and there may be an RA/TA office or two, there's not "a place" where students can work anyway, which makes "is it bad to work from home" something of a moot point.
- Working from home benefits certain work styles. If you're the kind of person who prefers to work in a spread out, sprawling fashion, with multiple monitors, tons of stacks of paper, and a whiteboard or two, that's just not feasible in most grad student offices, even when they do exist. And when the only spaces that exist are transient ones, like shared desks or cubicles, library study areas etc. you also can't customize your work space at all - and expensive textbooks and laptops are theft bait.
- It facilitates more flexible schedules. Universities tend to be closed at 3:00 AM. I tend to do my best work at around that time. This seems to be relatively common in academia, and as academia seems to promote an "always working" lifestyle, having a single centralized space you have access to 24 hours a day is nice.
- You do lose out on departmental interactions somewhat. The concern about missing seminars is I think a bit of a non-issue. Those are easy to miss when you're working on site, and can be attended with just a little bit of diligence on the part of someone working from home. What I've found missing more is the transient, passing in the hallways interactions. I realized, for example, one day that I had gone several weeks without talking to anyone about my field. That's not good. It also does some harm to cross-polination and ideas from unexpected places.
- It can get lonely. Seriously, this seems to be a major challenge. It's possible, and the workload sometimes promotes, just disappearing into a cave.
- It's possible to get distracted, as it always is working from home. "Real life" has infinitely many things to take care of, and its much easier to defend "work time" if you're at an office. But then unless you have an office its easy to get distracted in a department where your friends and colleagues are around.
Overall, I wouldn't say its bad. I know successful academics who work almost entirely in their office, and who work almost entirely from home. I'd say the best way to promote on-site work, if a university is trying to accomplish that, is not to focus on the bad parts of working from home, but on addressing what makes it appealing. I finally moved entirely to a working from home setup because I got tired of "work" involving camping out in cramped spaces, without the materials I needed, fighting for power outlets.
As for whether or not your physical presence is important to the department - it depends on the department. I've known some who don't care as long as you show up to what you need to, and others that absolutely want you there, and subtly penalize those who aren't around.