The interviewer is asking this question to better understand where and how you get your best work done. When preparing for this question, be sure to do as much research as you can on the organization to gain a better understanding of the overall environment. Also, look carefully at the job description for any language around working conditions or physical requirements, which are often listed at the bottom. Be truthful in your response to this question, because you do not want to offer false expectations or set yourself up to work in an environment that doesn't suit you.