Semilocal density functional approximations occupy the second rung of the Jacob's ladder model and are thus expected to have certain limits to their applicability. Recently, it has been hypothesized that the formation energy, being one of the key quantities in alloy theory, would be beyond the grasp of semilocal Density Functional Theory (DFT). Here we explore the physics of semilocal DFT formation energies and shed light on the connection between the accuracy of the formation energy and the ability of a semilocal approximation to produce accurate lattice constants. We demonstrate that semilocal functionals designed to perform well for alloy constituents can concomitantly solve the problem of alloy formation energies.PACS numbers: 71.15. Mb, 71.20.Be, 64.30.Ef, Density Functional Theory (DFT) with its various practical approximate forms has come to have a deep impact on many different fields of science. The local and semilocal exchange-correlation (XC) schemes, such as the Local Density Approximation (LDA) and the Generalized Gradient Approximation (GGA) [1], are two of the most important levels (first and second rungs of the Jacob's ladder model [2]) on the DFT XC approximation gamut. Recently, there has also been important developments in meta-GGAs (third rung of the Jacob's ladder), where the functional also includes dependence on the kinetic energy density. Empirical meta-GGAs, e.g. the M06 family [3][4][5], and recent nonempirical meta-GGAs, such as MGGA-MS2 [6] and SCAN [7], can lead to significant improvements in both structure and energetics [8].The computational efficiency of the first three rungs of the Jacob's ladder is superior compared to most of the more sophisticated approaches. Naturally, for this reason semilocal XC approximations are in many instances preferred, especially when large amounts of individual calculations are involved. Therefore, it is vitally important to establish a clear picture of the limits and capabilities of semilocal approximations.In a recent Letter by Zhang et al.[9], it was surmised that conventional semilocal DFT simply falls short of being able to accurately predict key properties in alloy theory, such as the formation energy. One of the most spectacular failures happens with the well-known Cu-Au system showing a series of intermetallic compounds. Zhang et al. found that the experimental formation energies of these intermetallics are far smaller in magnitude than their (semi)local DFT counterparts and concluded that nonlocal exchange interaction schemes, such as the HeydScuseria-Ernzerhof (HSE) hybrid functional [10,11], are necessary in order to mitigate the delocalization error of standard approximations and to increase the accuracy of the theoretical predictions. This finding has raised strong doubts concerning the scope of (semi)local DFT and in particular the applicability of LDA or PerdewBurke-Ernzerhof (PBE) [12] GGA to Cu-Au and similar important members of the highly versatile class of metallic alloys.In this Letter, we adopt an energy functional perspective a...