In my opinion that kind of talk can be considered toxic. If it’s merely about socialising and getting to know your co-workers better that’s certainly fine and conducive to a positive work environment.
However, often water cooler talk involves bandying about rumours as well as creating information silos between those who happen to have been present at the time. This – intentionally or not – excludes others from that information. It keeps them from participating and contributing and over time potentially gives rise to an unfair advantage for those who frequently in that kind of talk. This is precisely how toxic office politics in larger organizations come about over time.
Communication, especially in a business context, should always be open and everyone should be allowed to contribute.
For this reason water cooler talk, or rather the absence of it, actually is another strong argument in favour of remote work and a remote-first work culture. Such a work culture allows you to
- make communication explicit and transparent
- get everyone involved on an equal footing
- avoid the creation of information silos