My tools have lived in the basement as long as I've lived here, though I've occasionally set up a temporary collection upstairs while installing flooring or doing other work.
The house is about 27' x 30', and the basement is about that size, with two large posts and a staircase interrupting the space. There's also a trench along the back and side of the foundation wall, which provided some drainage to water coming through the wall, and which makes useless about a foot of space in from the wall. At one point there were shelves and cabinets back there, but I ripped them out earlier this year before we had major drainage and repair work done.
That repair work is really what got me back into woodworking. First, it forced me to remove everything I could from the back part of the basement, which meant reorganizing and figuring out what I had back there. Second, it solved a major problem that had always caused trouble: the serious dampness of the basement. I've had two floods down there, and there was always water coming through the trench and up through the concrete. It had a major effect on the wood I worked with and the tools I used, and never for the better. Now, though, it's much drier, a much better place to work.
When I started, I just used one corner of the basement, but I've steadily expanded to include most of it, except the furnace, water heater, and laundry areas. There's a lot of reorganization yet to come, but I don't think I can complain about my space much any more. True, the ceiling is low, and the floor tilted, and I need to work on lighting, but having a garage door (if a small one) coming in is helpful, and it's really a lot of space.
You can get a sense of how the basement used to look at this old shop tour. Most of the mess shown there has been tamed, or at least stuffed into labeled plastic boxes. I'll have more on that soon.