In baseball parlance, chemistry or team chemistry refers to the ability of players on a team to work together in a positive manner and to outperform expectations based on their talent level. While chemistry has been talked about for decades, its very existence is in doubt (much like clutch hitting): is it truly something which exists and could potentially be measured, or is it simply the positive result of good on-field performance (i.e. players will get on well together when they win, but not when they lose)?
The issue of the tangibility of chemistry remains unresolved, but the concept remains beloved of sportswriters, as a means to explain what are sometimes puzzling cases of seeming overachievement. In recent times, it has often been associated with certain successful teams, such as the "We Are Family" 1979 Pittsburgh Pirates, the "Cowboy-Up!" 2004 Boston Red Sox who laid the "Curse of the Bambino" to rest, and the particularly resilient 2012 San Francisco Giants. While these teams were undoubtedly close and tightly-knit, what remains to be proved is that there was an element specific to these teams and not found on others who may or may not have been as successful.
There is a similar argument to be made about lack of chemistry, as many teams have been famous for their internal turmoil and dissension, but some of these were quite successful as well (the 1977 and 1978 New York Yankees come to mind).
Some players are considered to bring good chemistry to a team, with David Ross being a famous recent example. However, the quality does not seem to be permanent: famously, Dick Allen was considered to bring excellent chemistry to some successful teams (the 1972 Chicago White Sox and 1976 Philadelphia Phillies) but to have been a "clubhouse cancer" on others.