When work and social life are the same, you never need to leave work.
I've seen too many buy into that just to lose their entire social lives over a job change, and also have horrible life satisfaction over the long term.
Yes if you have no life outside of work then it can't be good. However I still don't know if that's a common enough problem to solve for by making everyone work from home.
I think the more common issue would be lack of collaboration and ties to the company and colleagues when working fully remote.