Studies of binding are often question: first, is the observed binding functional, and second, if it is, which function? Is it activation or repression? The first question relates to binding at different sites; the second relates to binding at similar sites. These questions apply to transcription factors binding to genomic DNA and to protein interaction domains binding to their partners. Here, we explain that both can be understood in terms of allostery and the cellular (or in vitro) environment. The idea is simple yet powerful; it emphasizes the role of allostery in de-fining whether binding between transcription factors and (cognate or noncognate) DNA sequences will lead to function and to the type of function. Allosteric effects are the outcome of dynamically shifting populations; thus binding to even slightly different DNA sequences will lead to different transcription factor conformations that can be reflected in the binding sites to their co-regulators. Currently, allostery is not considered when trying to understand how binding phenomena determine the functional outcome. Allosteric effects can enhance the binding specificity in a function-oriented manner. Here we provide a biological rationale that considers cellular crowding effects.