Learn Portuguese (Portugal): O vizinho curioso afirmou que trabalhava em casa. - The curious neighbor claimed that he worked at home.

This is the core rule of reported speech when reporting in the past. The neighbor originally said 'I work at home' (trabalho em casa - Present tense). Because the reporting verb is in the past (afirmou), the original Present tense shifts backward to the Imperfeito (trabalhava).

Because the pronoun is dropped, how do we know who is working at home?

The verb form trabalhava can mean 'I worked', 'he worked', 'she worked', or 'you worked'. Here, context naturally implies the neighbor is talking about himself. If he had meant someone else, like the speaker, a pronoun would be added for clarity, such as que eu trabalhava.

Why use afirmou instead of the simpler disse (said)?

Using afirmar (to state / to claim) makes the sentence more precise than just using dizer (to say). It implies the neighbor stated it firmly or presented it as a fact. It is a very common reporting verb to watch out for.

Why do we use em casa instead of na casa for 'at home'?

The fixed phrase em casa specifically means 'at home' as a concept. If you used na casa (in the house), it refers to a specific physical building, and you would usually need to specify whose house it is, like na casa do vizinho (in the neighbor's house).