There is no easy answer to this question as there are many factors involved. Homeschooling can be a rewarding, enriching and wonderful experience for all involved but it can also be limiting, frustrating or overwhelming. There are as many approaches to homeschooling as there are motivations for choosing it as an educational option so without knowing more about specific reasons and how parents thinking about going about it, it's difficult to answer this question in depth.
Common areas of concern or questions:
1) Socialization and socializing. Most people worry that children will not develop appropriate social skills nor have enough exposure to social situations with peers if they are homeschooled. To be very clear about this there has never been any study conducted that proved that homeschooled children are significantly deficient in social skills when compared with a representative population of their peers. Most homeschoolers have extensive social interaction through municipal recreation activities such as sports teams or arts classes, volunteering, other homeschoolers or other social networks such as church groups or neighbourhood friends. It varies from place to place but the recent North American growth of homeschooling means that there are homeschooling or homelearning groups in most states and provinces.
2) Academic performance and development. Again, this issue largely depends on the type of homeschooling you are considering. If you use published curriculum you will have a more concrete evaluation of your child(ren)'s development and progress with regard to academics. If you choose to use a less structured method, yes, it is a little harder to know if your kids are progressing. It is often found, however, that "unschooled" homeschoolers are avid learners. They embrace their own natural curiosity and are enthusiastic about exploring the world around them. In this approach, it is important for the parent/caregiver involved to offer different experiences and opportunities to the child(ren), to encourage their creativity and curiosity and to be an active co-participant in the daily learning that one can find in every life experience. A.S. Neill's books about his school, Summerhill can offer a great deal of insight into children's natural capacity to learn and seek out information. While his work can seem a little dated and tends to lean towards Freudian ideology, it is still inspirational and speaks extensively about trusting a child's natural inclination to learn as well as avoiding being caught up in cultural fears surrounding learning and curriculum.
3) Special needs. Many parents choose to homeschool because their child is not managing well in the mainstream system (or it is feared they will not). In many cases, the increased attention, individualized lessons and pacing can help these children learn in a situation that can be structured to meet their individual needs and abilities. A word of caution, however, is that if the child has behavioural issues, the parent must be comfortable with the idea of spending all day everyday with the child and be constantly mindful of whether or not he or she is becoming overwhelmed or frustrated by this intense level of contact. If a child is struggling socially at school, homeschooling might be an answer but parents in this situation need to be especially cognizant of the potentially (if the child withdraws and social engagements aren't encouraged) limited social interaction of their child once homeschooling. Working with a counsellor or social worker to ensure that they are able to meet the child's needs for addressing the social problems, rather than just running away from them by pulling the child from the normal school system is advisable.
4) You don't have to commit long term. Many families choose to try homeschooling or to use it to help children over a rough patch without intending to continue with it for an extended period. Some choose to keep children home until they hit middle or high school, some pull their children out of regular school for a year or two here and there to supplement their traditional education with more self-directed or flexible periods. For some children, taking a year off to get out of a bullying situation or to deal with the diagnosis of a cognitive or behavioural problem is also very helpful. Some families try homeschooling and find that it isn't a good fit for some or all of the individuals involved and the children return to school. One of the key components of homeschooling is its flexibility, that it can take on the shape of whatever the families involved want or need it to take.
There is no "right way" to homeschool and its outcomes largely depend on the commitment and engagement of both the parents and the children involved For further information, see John Holt's work as he wrote extensively on how children can learn away from school as well as why he thinks the school system is so detrimental to children's development. A.S. Neill's books about his "free school" also speak extensively about how children can learn in a less structured environment. Mothering Magazine also has lots of great resources for alternative approaches to education as well as first person accounts of homeschooling from all sorts of perspectives (http://mothering.com/education). Basham et al.'s meta analysis is an accessible academic resource that summarizes a great deal of homeschooling research and offers insights into outcomes for homeschooled children (http://www.fraserinstitute.org/commerce.web/product_files/Homeschooling2.pdf).