Are in retreat, like one's neighbours? (7)
I believe the answer is:
nearest
'like one's neighbours?' is the definition.
'are in retreat' is the wordplay.
'in' means one lot of letters goes inside another.
'retreat' becomes 'nest' (nest is a kind of retreat).
'are' inserted within 'nest' is 'NEAREST'.
(Other definitions for nearest that I've seen before include "touching?" , "Closest to hand" , "Most accessible" , "Stingiest" , "Most local" .)