I've been telecommuniting for 5 years now as a database consultant (developer). My corporate office is in San Jose, but I live in KY. From time to time I need to travel to work with clients, get some training, participate in design sessions (which are easier in person), or conduct a rollout.
Lately, even many of these tasks have been fully remote. For the last two projects, I never saw any of the clients. We spoke on the phone, they FTPd their databases and applications, I developed them remotely and used WebEx or Microsoft Placeware to demo the product (rapid application development mostly) and once complete, I bundled up the files and scripts and FTPd them back to the client. In some cases their IT group took it from there, in others I conducted the entire rollout via remote control.
As for my company, I'm a lot cheaper being remote. The only equipment I require is a laptop, and the rest I supply. I get reimbursed for my business line and they provide a partial reimbursement for broadband and cell phone charges. Being an IT guy I rarely need any help from my corporate IT. They just mail me CDs from time to time and I install the things here.
Many of the other benefits were mentioned in the article or by other responders, so I won't restate them. However, one that wasn't emphasized was the employee loyalty. I have a pretty sweet setup. I make a decent San Jose salary while paying a Mid-West cost of living. I never commute. I work my own hours and unlike many respondents, I'm not tied to the 8-5 at all. I frequently work 10-6 or 12-8 etc. I also frequently work 4 hours one day and 12 the next. As long as I hit my deliverables and attend meetings that I've agreed to, everyone is happy. During light times (haven't seen these in a while) I can take a few hours off and play with my girls. During busy times (these have been very common lately) I can put in overtime easily. My boss relies on me letting her know when I need more work or when I'm getting overloaded.
With all the benefits, how likely am I to leave the company? It would take an unbelievably great opportunity to pull me away. I have turned down jobs making $10-20k more that would require me to go into the office. It's just not worth it to me. Other people in my department have left for companies willing to pay only slightly more than they were making. Replacing an employee in my department takes about 8 months. 2 months to find them and then 6 months to train them. Of the employees who have left the company willingly, only one was a telecommuter -- and she left for another telecommuting position.
Telecommuting doesn't work for every position, but for ones that it does work for, it's a wonderful thing -- both for the employee and the company.
Best of luck to those looking to become telecommuters.