At the USPTO website you can read what "likelihood of confusion" boils down to:

"The principal factors considered by the examining attorney in determining whether there would be a likelihood of confusion are: - the similarity of the marks; and - the commercial relationship between the goods and/or services listed in the application. To find a conflict, the marks do not have to be identical, and the goods and/or services do not have to be the same. It may be enough that the marks are similar and the goods and/or services related"

So, the two most important criteria to determine if there is a likelihood of confusion are:
1. Trademark similarity - Do the two trademarks sound or look similar?
2. Related business - Are the two trademarks being applied to products or services in a similar or related line of business?

An example: "Knabell" and "Nable" - two names that sound very similar. If both names are being used for companies selling hot dogs, there's going to be a strong likelihood for confusion. But if one is selling lemons to retail chains and the other is selling coffee to consumers, both trademarks might be able to coexist.

Ultimately, it is the courts that will make the final ruling. To understand how a court can think, you can read about "Eat at Joe's" vs "Uptown Joe's" http://trademarklawbriefs.com/?p=47#more-47.