Remote Work Locations - Best way to set them up

Summary:

Currently we operate in three states (two with state tax, one without). We are looking at letting certain types of employees work remotely 100% of the time from home in three new/other states where we previously have not operated/done business. Since we have never done something like this before, I am hoping you can share your experiences and best practices.

Some of my questions are:

Do we use the existing work locations and just use the 'work from home' flag?

What does the work from home flag do (we have never used it)?

Do we need to create a generic work location for each of the three new work state and just use that since there is no state tax in the three states we are looking at? Our payroll system is still in Oracle EBS so we also have to take into account the integration of the hr data down to EBS (we use Oracle's co-existance patch)