Soooo true... the living-on-campus experience is so important, even if your parents live right around the corner. After 18 years, who
wouldn't want to move away from mom and dad and curfews and expectations that you'll be in bed at a reasonable hour and "no beer pong for YOU, young lady / young man"?
My parents were ok with wherever I wanted to go to school as long as it was somewhere that would provide a good quality education. The only school where I was expressly forbidden to apply was Yale, as New Haven wasn't exactly the safest city at the time. (I wouldn't mind sending a hypothetical child to Yale, though. New Haven is reasonably safe these days, though there are areas I wouldn't want to enter by myself at night.)
My husband's parents, OTOH, wanted him to go to an Ivy League school close to home. He was forced to apply to Yale, even though he got into MIT early action, because MIT isn't Ivy League, and his mother wanted him 1 hour's drive away instead of 3-1/2 hours.
I can guarandamntee you that if he'd gone to Yale she'd have driven up unannounced from time to time.
Anyway, like I said upthread, my hypothetical child's happiness would be most important, whether she picked a school around the corner or on the other side of the world - as long as she stayed away from HAHVAHD and from any school where "mandatory chapel" or "women must wear skirts" appears in the school rules.