In my opinion, the number of in-state PWO's you have in your program signifies the health of the program. If Purdue/IU has just a couple, it means that they have been losing so badly the last few years that high school kids - even though they were raised Purdue/IU fans - will go elsewhere and play versus walk-on for their favorite college. If the program is poor, its not worth the sacrifice of your body and your grades to play as a walk-on, and most would rather just enjoy being a student at that same university.
If the program is strong, and has been winning, kids will take the PWO, and that will increase the health of the program in 3 distinct ways. (1) In-state PWO's bring the knowledge of the history, traditions, rivalries, and pride for a university that you don't have when a kid from Florida steps on campus at Purdue/IU. (2) In-state PWO's help the out-of-state kids transition into the new environment including the climate, community, and whereabouts. They can bring a home away from home feel that is needed. (3) In-state PWO's put butts in the seats and get people to follow the team... plain and simple. It's easier for an in-state PWO's friends and extended family to get to a game at Purdue or IU than it is for a player's from Florida.
I have 2 good examples of this... the Iowa Linebacker room during springball of 2018. They had 19 LB's on the roster... 6 of which were scholarship. The health of Iowa's program is strong with consistent winning seasons, and thus 13 in-state PWO LB's were giving it their all in attempts of making the team and earning a spot. It only takes 1 to earn specials team playing time and more will get in line in the future for their chance at success.
The other example is Wisconsin OL during springball 2018. They had enough in-state POW's to line up 4 deep OT to OT. And they were all BIG. Health of the program very good. And yes, many of those PWO's could have played at another smaller in-state college.
So the fact Purdue and IU are getting really good in-state high school football players to accept PWO's is a very good sign for those B1G programs, and you will several of those kids contribute in some manner if they stick it out for several years.
Michigan has a sign in their locker room that reads "Those who stay will be Champions", and its not about the fact that they have never played in the B1G Championship game. I think the same can be said for in-state PWO's for Purdue and IU now given those teams have moved up from the bottom of the B1G and are playing competitive football weekly now.