It's pretty remote, and the entirety of the city revolves around a single employer. Everyone who works there either works directly for Microsoft or is closely affiliated with Microsoft business. Ditto everyone who lives there.

It's far from the nearest major city (Seattle), and to make matters a bit worse, there is a large natural barrier between the Company Town and the city (a huge lake in the way, with highly congestion-prone bridge crossings).

The negative side effects of this are too many to fully enumerate. Beyond the general boredom of living in a place where everyone works for the same company, there's also the issue of not having ready access to cultural events (which tend to be urban), the lack of proximity to competitors or indeed actual users of your products, etc.

Being outside of a major urban area is also limiting for employees in that there is substantially less choice in where you can live. Companies based in Seattle offer employees the full gamut of commuting options and accomodate both urban and suburban lifestyles thanks to the hub and spoke model of transportation. Being outside of a hub reduces the number of places that are within reasonable commuting distance.