A new post at the ArenaNet blog by Jordan Massey gives us more detail on the WvW squad mechanic:
Hi, everyone. I’m Jordan Massey, a gameplay programmer on the WvW strike team. My job for the last few months has been to implement our WvW designers’ ideas. Today, I’d like to tell you a bit about the squad system. By its nature, it’s something that we’ve had to sneak in since we can only evaluate it in a live game environment, but the time has come to get the word out!
This is one of the few areas where ArenaNet has to impose a hierarchy, allowing commanders to communicate with the members of the squad (but not vice-versa). When you’re a member of a squad, your commander can give orders that are only visible to members, and place map markers for attacking, defending, rallying, and supply points.
Joining a squad is easy and automatic — no approval process required, and leaving is equally easy.
If you’re not in a squad, you can designate yourself as a commander and others can join your new squad. You’ll have a marker on your character to show other commanders on your side and unaffiliated players that you are a commander. However, to get the right to designate yourself as a commander you need to purchase a manual from an NPC called a Master Strategist merchant (and they’re not cheap).
The squad system is not limited to WvW, as it can be used in PvE as well.