We study Morse-Bott functions with two critical values (equivalently, non-constant without saddles) on closed surfaces. We show that only four surfaces admit such functions (though in higher dimensions, we construct many such manifolds, e.g. as fiber bundles over already constructed manifolds with the same property). We study properties of such functions. Namely, their Reeb graphs are path or cycle graphs; any path graph, and any cycle graph with an even number of vertices, is isomorphic to the Reeb graph of such a function. They have a specific number of center singularities and singular circles with nonorientable normal bundle, and an unlimited number (with some conditions) of singular circles with orientable normal bundle. They can, or cannot, be chosen as the height function associated with an immersion of the surface in the three-dimensional space, depending on the surface and the Reeb graph. In addition, for an arbitrary Morse-Bott function on a closed surface, we show that the Euler characteristic of the surface is determined by the isolated singularities and does not depend on the singular circles.