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it means that two people are friends, like two peas in a pod
The phrase, "as close as two needles on the same twig," means that two friends as close to each other as needles on the same twig.
A phrase has been defined as the group of words that has been arranged together to form the conceptual component of a clause.
Phrase and its meaning
The phrase, "as close as two needles on the same twig," has been representing the meaning similar to the condition with the needles in the twig.
It has been depicting that as needles as close to each other in a twig, two close friends are close in the same manner.
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