It has recently been shown that quantum-confined states can appear in epitaxially grown van der Waals material heterobilayers without a rotational misalignment ($theta=0^circ$), associated with flat bands in the Brillouin zone of the moire pattern formed due to the lattice mismatch of the two layers. Peaks in the local density of states and confinement in a MoS$_2$/WSe$_2$ system was qualitatively described only considering local stacking arrangements, which cause band edge energies to vary spatially. In this work, we report the presence of large in-plane strain variation across the moire unit cell of a $theta=0^circ$ MoS$_2$/WSe$_2$ heterobilayer, and show that inclusion of strain variation and out-of-plane displacement in density functional theory calculations greatly improves their agreement with the experimental data. We further explore the role of twist-angle by showing experimental data for a twisted MoS$_2$/WSe$_2$ heterobilayer structure with twist angle of $theta=15^circ$, that exhibits a moire pattern but no confinement.
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