I've been in a relationship like this for a couple of years. We're both single parents and my partner lives 10 minutes away. We see each other when we can, which is basically every other weekend. At the moment it works for us.
With 5 kids between us (all age 8 to 13) a blended family just wouldn't work - it'd be total chaos. Neither of us wants to relocate despite only being 10 minutes drive apart, mainly because kids are settled at their schools and we don't want to change them. Also, our housing situation makes it impossible - obviously neither of us has a house big enough for 5 kids, but my partner rents (social housing), and I have a mortgage. I/we couldn't afford to buy a big enough house together, and my partner doesn't want to give up the cheap rent of their social housing.
On top of that we're both quite independent and like out own space, especially after both getting burned by previous relationships.
There are some downsides though. I do find it quite hard that we don't see each other for two weeks at a time. Evenings are the worst, it's so frustrating knowing that you have someone who's relatively nearby, but also out of reach.
I think it's important to have an 'endgame' - something to work towards where we will be together. It'll probably be 10 years before we are in a position to live together - kids are grown up. Now I've no problem with waiting for that, but I need to know that it's on the horizon. Except we've not discussed it seriously yet - planning that far ahead seems like obscene amount of commitment (neither of us has had a relationship last that long in total, nevermind before living with someone). So I do have a bit of an insecurity thing in that I'm worried about investing the next 10 years (my 40's) with someone who might just want to carry on living apart forever.
When I explained our relationship to a friend she was flabbergasted at the idea of being in long term relationship without living together: "Are you really prepared to wait that long to be properly together with someone??" Her attitude threw me a bit, but clearly this arrangement isn't for everyone.