Basic Sectoids use their mind power to shoot beams back and forth amongst each other. I haven't been able to figure out what they are trying to do. What is the point of these beams?
The ability is called Mind Merge.
As long as the beam is maintained, the target sectoid gains these benefits:
If you kill the sectoid giving the mind merge, the receiving unit will immediately die. The mind merge effect takes precedence over explosive damage death, so if you catch two sectoids (one mind merging the other) in a rocket, you'll still recover some weapon fragments.