I keep mine in the same room proudly displayed. Not only do you get to look at it and have easy access for changing movies and music, you often can get by with shorter wires.
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Turntables and tubes are best kept in another room, that way there is virtually no acoustic feedback and harmonic interference with the equipment. Once you put these in another room you will be amazed with the improvement in the sound. Call it the ultimate tweak. An added benefit is that interconnects can be very short, with only the speaker cables long runs. Additionally, air circulation can be maxed, and if necessary a fan can be employed to extend equipment life.
Hiding gear is naturally more work and expense and makes changes much more difficult than when everything is left out on the floor or an open rack.
On one hand it is probably better to put things away and expose them to less vibration/dust/kids - keeping everything neat and tidy. On the other hand, poor ventilation may shorten equipment life and unless you automate gear and use remote repeaters then you will probably end up leaving the cabinets open during play anyway - which looks uglier than leaving everything on display in the first place.
Does it affect the sound - probably not enough to matter either way unless you are with vinyl or tubes - both tubes and vinyl can pick up acoustic feedback and will benefit from acoustic isolation.
I tried hiding my speakers in the basement, but I had to turn them up really loud to even hear them upstairs. So they're out in the open now. Everything else is behind doors in a cabinet. I like to look at it but find it a bit distracting when I'm listening to music, and overall a bit cluttered looking (as in my system pics which are way outdated). My wife, on the other hand, definitely does not like to look at it and I do consider that since we do share the house together. I don't find any of it particularly appealing to look at...except for my SET amps, which I do enjoy looking at. The other stuff just looks like so many metal boxes. I get as much pleasure staring at a microwave oven.
Well how large a room is would be a big deal for me, I have my rack in my room but most of my music is kept on wall outside room so it doesnt close in on me too quick. I am now in my own room SO doesnt care about how it looks as I am in a pit in basement but I like to see the rack and gear.
To me hiding equipment is more of an HT thing where WAF even dictates pretty little or built in speakers.
I find equipment between the loudspeakers distracting, almost as much as a blank TV screen. When my gear was between the speakers and included a big McIntosh amp, I found myself putting the record album cover in front of the amp so I wouldn't have to look at the meters, especially when the room was dimly lit.
Aesthetically, I find it much less overwhelming with the speakers placed separately. There's also a little more flexibility with fine-tuning the speaker placement.
All in all, I listening to my system more when I don't have to look at the pile of gear.
I'd hide everything if I could. Unfortunately remote controls and heat from tubes makes that difficult. I'd even hide my speakers if I could. I hate to admit to the unwashed that I so enjoy such an arcane hobby. :-) Besides I find all of that stuff visually distracting when I really just want to hear music. For some unexplicable reason though, I do like to display my music along with books in my shelving systems. Go figure.......
I use a soft cloth, similar to that which I use for cleaning glass lenses (cameras or eye), to dust my stuff.
As you can see from my systems, I like the hybrid approach. When in use all my equipment is visible, when not in use its closed up in a cabinet. I use this approach because my setups are in general living spaces. I often have guests with kids, etc. and I like the security of having the equipment off limits. If i had a dedicated listening room in basement or similar space, I would just leave the equipment open all the time.
I like my equipment in a armoire, except for the speakers, of course. The added advantage of the armoire is the isolation of the turntable from airborne vibration, which can be significant.
Look at my Virtual System for an idea of how it looks. My system is in a multipurpose room, so WAF needed to be high. Still, when I get a dedicated room I'll keep the armoire, at least for the turntable.
Remotes are no problem at all. There are very discreet relays that receive the signal outside the armoire and transfer them into the components inside. Any installer will have them.