What I was referring to is that most law will define the "location of practice" as where the patient is, not where the doctor is. In most cases that is not a problem because they are in the same place. But it is different once you come to anything that could be considered "telemedicine: say you have a patient in a hospital in State X and a doctor in State Y but not licensed to practice in State X.
What a place like Montana has done is to allow Dr. Y to get a special, limited-purpose "telemedicine license" that would allow him/her to "work by remote in Montana".
You are right about "location of practice" being defined as the patients' location. When it comes to telemedicine, I think there are enough clinicians in each state to go around which minimizes the need for inter-state practice, except in instances where renowned specialists services are required, or in states that do not have enough specialists. The provision of such licensing may be available in other states if need be (haven't really looked into it).
I personally think the success of Telemedicine will depend on how well patients' are able to interface with providers and receive care right there in their homes without office visit's or inpatient admissions. This will be even more important in rural communities that are not near any hospitals. Doctors can call or Skype with patients, provide consultations, view still images of xrays, ct's; send electronic prescription to pharmacy, and have pharmacy deliver the medicine right at their doorsteps. Patients can provide parameters for things like BP to determine the effectiveness of medications etc. This is going to reduce the costs of healthcare tremendously.