I will make you understand what 2nd step means...
take the eg. 276^2
you can see 3 rows and 3 columns and numbers (2 7 6) are written in row wise and column wise.
Take first row,three box are there.
for first box , 2 and 2 the numbers. So product of 2 and 2 which is 4 is to be written in first box. Since we have to written it in two digits we write it us 04.
for second box ,2 and 7 are the numbers.so product is 14. 1 is written above and 4 is written below the diagonal.
for third box, 2 and 6 are the numbers. Product is 12. 1 is written above and 2 is written below diagonal.
similarly doing for all the boxes.
for second row,
first box have 7and 2
second box have 7 and 7
third box have 7 and 6.
i think you get the idea.
Like if satisfied