At room temperature, plastic flow of metallic glasses (MGs) is sharply localized in shear bands, which are a key feature of the plastic deformation in MGs. Despite their clear importance and decades of study, the conditions for formation of shear bands, their structural evolution and multiplication mechanism are still under debate. In this work, we investigate the local conditions at shear bands in new phase-separated bulk MGs containing glassy nanospheres and exhibiting exceptional plasticity under compression. It is found that the glassy nanospheres within the shear band dissolve through mechanical mixing driven by the sharp strain localization there, while those nearby in the matrix coarsen by Ostwald ripening due to the increased atomic mobility. The experimental evidence demonstrates that there exists an affected zone around the shear band. This zone may arise from low-strain plastic deformation in the matrix between the bands. These results suggest that measured property changes originate not only from the shear bands themselves, but also from the affected zones in the adjacent matrix. This work sheds light on direct visualization of deformation-related effects, in particular increased atomic mobility, in the region around shear bands.