I don't use them for a few reasons.
First off, my daughter is an only child - always will be, so I don't see the point of sending her off to be by herself (especially characterizing that as a punishment or consequence or however we want to call it). She's by herself too much already, I'm afraid.
Also, I think it kind of works in the reverse. Her "bad" behavior is usually in response to a request or instruction from me. I don't want to give her an "out" of whatever it is that we need to be doing at the moment. As in real life - we just, sometimes, have to power through.
And that leads to the next reason: time-outs aren't "natural consequences." I know some people think that yelling at a friend will end up making that friend go away and so the separation of time-out mimics that consequence - I don't think my dd could make that connection, and I don't think that's really how it works in real life. What happens, I think, is that things escalate because people don't know how to harness their emotions or control their impulses or whatever. That's what I want to help my daughter learn to do, so, staying inside of the situation gives me a better teaching opportunity. Sure, it can be hard on my ears/emotions/headache/whatever, but I do think that it's a much more productive way of parenting.
All that said, I do ask my daughter sometimes if she needs some rest when she's behaving in a way that's not appropriate (and I reluctantly use that word, because I think "bad" behavior is appropriate as children learn to navigate the world - I don't think we should encourage it, of course, but I do think it's developmentally appropriate). Sometimes she does need a few minutes alone, talking to her animals (her toys).
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