Surround eastern knight nearby (7)
I believe the answer is:
enclose
'surround' is the definition.
(enclosing is a kind of surrounding)
'eastern knight nearby' is the wordplay.
'eastern' becomes 'e'.
'knight' becomes 'n' (chess abbreviation).
'nearby' becomes 'close' (similar in meaning).
'e'+'n'+'close'='ENCLOSE'
(Other definitions for enclose that I've seen before include "embrace" , "Put inside" , "Bound" , "Shut in" , "Encompass" .)