Regarding the Maxwell Boltzmann statistics Maxwell boltzmann distribution is applicable when any number of particles can occupy a single-particle state. But I am confused about what exactly a "state" here refers to. When you think about a gas which obeys the MB distribution, it is made up of atoms or molecules and classically their state is both their position and momentum. If that is the case then it doesnt make sense to have any number of particles occupy an individual state as no two particles can have the same position despite the possibility of having the same velocity (therefore momentum). So is the MBD talking about energies of states rather than the actual states ? It is possible for different particles to have the same energy since they only need to have the same velocity. If that is the case then is the reason why MBD fails at low temperatures and high densities because of the fact that it is no longer possible to have the same energies just by having the same velocities as now a particular energy is confined to a specific location and a particle has to be in that location in order for it to have that energy.
 A: 
If that is the case then it doesnt make sense to have any number of particles occupy an individual state as no two particles can have the same position

This is relying on intuition/common sense too much. In physics, we work also with idealizations which are not perfectly accurate in the real world. One such idealization is that non-interacting particles do not interact and can occupy the same space. This is the case in the simplest model of ideal gas.
However, if the particles do interact and cannot occupy the same space, if they interact in a not too problematic way (no strong gravity or electrostatic interaction of monopoles), the MB distribution is valid. Derivations of the MB distribution based on general statistical ideas do not require that multiple particles have to be able to occupy the same point of space. MB distribution is valid, for example, for gas of hard spheres.

So is the MBD talking about energies of states rather than the actual states?

The Maxwell-Boltzmann distribution is the probability distribution for components of velocity $v_x,v_y,v_z$, or for speed values $v$.

It is possible for different particles to have the same energy since they only need to have the same velocity.

Yes.

If that is the case then is the reason why MBD fails at low temperatures and high densities because of the fact that it is no longer possible to have the same energies just by having the same velocities as now a particular energy is confined to a specific location and a particle has to be in that location in order for it to have that energy.

No, kinetic energy of a particle is function of velocity components only, location does not matter.
Kinetic+potential energy of a particle does depend on the particle location, as well as locations of other particles. But this effect by itself does not invalidate the MB distribution. If the inter-particle interaction is well-behaved (short-range, not too much energy in it), then the MB distribution remains unaffected. For example, velocities of molecules of liquid water in thermodynamic equilibrium should obey the MB distribution, even though there is a strong short-range interaction between the water molecules.
MB distribution can fail if some of its assumptions fails. Such as the allowed energies being a continuum - in quantum theory, the allowed particle energies no longer form a continuous set, but they are a discrete set of allowed values, defined by the shape of the container.
