It's always worth remembering in these conversations that the thing which for you is a MUST MUST MUST do, doesn't matter for someone else.
Personally, when I started working from home more way back when, I definitely did things like dress up business casual, worked from my home office, etc.
These days, I pretty much break all the rules. It's a case of being reasonably disciplined about working hours while still having some flexibility. I guess I've internalized a loose routine to the point where I don't need the props any longer.