The Repository location must be local to the LFS service, however, I believe that you are actually asking about Volume locations.  There are many things to consider when deciding where to store your Volume data.  To me, the biggest concern with Volume location is access speed.  Slow accessing Volumes will affect both storage and retrieval and cause bad Laserfiche experiences.  Often times, it makes the most sense to have the Volumes distributed across multiple storage locations/devices.  Frequently, enterprises will have a mixture of fast storage and slower storage.  Data that is accessed infrequently can reside in locations with slower access without much impact, while your daily work needs to be accessed as quickly as possible.  So what I usually recommend is that you keep current volumes local or on high speed network storage while moving older volumes off to slower network storage.