Click the tool palette icon shaped like a pencil wrapped in a coil to run the "Smoothing" tool, then drag the mouse over the rounded corner. Illustrator will make the rectangle outline flow ...

Bezier drawing relies on smooth and corner anchor points. Adobe Illustrator's Pen tool forms the program's principal means of creating freehand bezier drawings.

a) Use the Blend tool. To use the blend tool to blend objects in Illustrator, create the objects that you want to blend. In this case, I will use two circles and give them different colors.