When your relationship with someone is really good, you naturally become good friends. You're always palling around together and acting buddy-buddy, so everyone can tell how close your friendship is.

仲良し describes close friends or people who get along really well. The word has a friendly, cute vibe and is often used for kids, families, or anyone with a warm bond.

Both the readings here are kun'yomi, which you already know. Just be careful with 良 — in 良い, it can be read よ or い, but in 良し it's always read as よ.