There are many day schools for kids, which allow the child to have a safe home turf advantage and at the same time, allows time away from the parental gaze and to do activities that are necessary to their development. But many a times this also makes the student sort of dependent on the fact that their parents will always be their to protect them, be it from the wrath of a teacher, an injury or any little thing.
There is also, something about living in a hostel, miles away from the safety net of the parents, having to do everything on your own, being answerable for all your decisions. It allows one to have a broader perspective of life.
One also, makes connections with people from all walks of life, from different parts of the world, which can help them teach cultural sensitivity. They are no longer ignorant, of cultures apart from their.
But, at the end of the day, whether boarding or day school, it should never negatively affect the student.