2 atoms , A and B , close together : The electron in atom A has wave nature and therefore there is no clear boundary hence there is probability of finding the electron near atom B . So the boundary is unclear due to the wavefunction description of the electron .
How does this affect the energy level? Isolated atoms have clear energy levels, but if the neighbouring electron ventures into each others territory than the energy level becomes altered and cumulative effect of surrounding atoms form energy band.
Imagine if you are an electron and your neighbour (another electron) ventures into your house(atom) , would your mood(energy level) be affected. In fact it make us jump with fear!
