Two characters said to be very good (5)
I believe the answer is:
excel
'be very good' is the definition.
(be excellent)
I can't explain the rest of the clue.
(Other definitions for excel that I've seen before include "Do better than, give great performance" , "Show brilliance" , "Perform exceptionally well" , "Do superbly well" , "Be exceptionally good (at something)" .)