Mike wrote -- 

> Back a generation or two in my family I think that was more common that
> being at a funeral home.  

  When people lived on farms mostly the loved ones were also buried on the
property.  
  My old family home there were many buried near the house.
  When the old homestead was sold many years ago the new owners, who could
care less, took the tombstones and broke them up to use as gravel in a drive
way!
  There is now no idea who is buried where there.  :(
  It one lived in/near a town there would be a common burial area, either
at a church or some plot near town.
  It wasn't until the early 19th C our idea of a funeral home/cemetery came
into being.
  Each culture has their own ways of dealing with death and the death.
  And in times of epidemics mass graves were common. 

> I have seen photos of relatives laid out that were taken in living rooms.

  In addition many times the guest of honour would be photographed in life
like poses, since the only photo ever taken of them.  This was esp. true
with children.

> IIRC, some families had a tradition of someone
> actually sitting with the body at all times, even at night.

  That's an ancient tradition, many centuries old.  This is two-fold.  One
out of respect and the other to make sure the person wasn't just in some
sort of coma and not buried alive.
  Joe