In this function y initially has no value, but a call to foo() gives no error. Why?

[DeaD_EyE]

This is a closure. A function inside a function.
The inner function has access to objects of the outer function.
The function bar access x from foo's scope.

def foo(x):
    def bar(y):
        return x*y
    return bar

Calling foo(), will return a function object:

Output:
<function __main__.foo.<locals>.bar(y)>

You've to call the returned function bar to get the return value from bar.

func = foo(13)
# or in one line
# result = foo(13)(42)
result = func(42)
print(result)

Output:
546