An interaction energy decomposition analysis method based on the block-localized wavefunction (BLW-ED) approach is described. The first main feature of the BLW-ED method is that it combines concepts of valence bond and molecular orbital theories such that the intermediate and physically intuitive electron-localized states are variationally optimized by self-consistent field calculations. Furthermore, the block-localization scheme can be used both in wave function theory and in density functional theory, providing a useful tool to gain insights on intermolecular interactions that would otherwise be difficult to obtain using the delocalized Kohn-Sham DFT. These features allow broad applications of the BLW method to energy decomposition (BLW-ED) analysis for intermolecular interactions. In this perspective, we outline theoretical aspects of the BLW-ED method, and illustrate its applications in hydrogen-bonding and π-cation intermolecular interactions as well as metal-carbonyl complexes. Future prospects on the development of a multistate density functional theory (MSDFT) are presented, making use of block-localized electronic states as the basis configurations.