For example, if you're simulating charged particles moving around, and you use a force equation F = k q1 q2 / d^2 (1), then when d approaches 0 (i.e. when the distance between particles approaches zero), then the force F goes to infinity.
For atoms, it works the same way. If you use a force law like Lennard-Jones (2), it also has the interatomic distance in the denominator, so the equation has a singularity baked right in.
You could always adopt a more complex force equation that doesn't have a singularity in it. But in practice, it's easier to use a simple but singular equation, and then selectively ignore its bad behavior.