Additionally, modern OSes log and cache stuff all over the filesystem and even though you cleared your browser history and cache, it's highly likely there's still undeleted detritus sitting on your device's storage. I have recovered supposedly-cleared caches many times without having to resort to filesystem forensics tools, simply because of stuff like log rollovers, and routine snapshots of data caches.
Where do I draw the line? If I were subjected to it myself, I'd keep looking for a job where this kind of monitoring didn't happen. Not because I want to goof off on HN all day, but because its creepy, fosters distrust between employer and employee and hinders my tasks.
I'm not sure how universal that is. Personally I always prefer keeping my stuff away from a work machine, but this does not mean that surveillance is OK.
Where I live (Western Europe), it doesn't really matter whose property it is, surveillance is not allowed. If your employer is analyzing your web traffic and/or reading your e-mails this is illegal even if it's on their property or their network.
At the very least, a regular full audit of your machine will be done. It will be looking for unauthorised executables, scripts, and certain filenames. This is in addition to the normal malware/virus scanning with central reporting that will also be enabled.
Then there's the prevention of the user being elevated, so that normal users can't install anything (although stuff like Chrome, and some Chat apps try to bypass this) - some places totally rely on a central deployment platform (i.e. SCCM) other places allow exception via one-time codes.
It's this prevention that tends to fubar most dev tools, which assume the user has a high level of rights.
Web usage is definitely logged, with either auto alerts to line managers/HR based on keywords, or is only actively looked at if it's a problem employee. Most countries have employment laws, which mean that web usage HAS to be logged - it's to protect the employee as much as the employer.
Unscrupulous employers also install 'idle' monitors, to check that the user is actively working on the machine during the day (I'm looking at you, Barclays Bank!) - these are people no self respecting professional should ever work for in my opinion.
In short, if you think you are trying to do something on your work machine that you do not want you employer to know about, then it's probably something you should be doing on your personal device instead.