How Square off and exercise an Option is different ?

It is when you take the exact opposite position to your current one, it's called "squaring off".

Let's suppose that your current position is BUY Option on Reliance. If you SELL Put Option On Reliance with the same strike price, lot size, and expiry, then you are quarrelling your position.

When you wish to receive the Option's underlying stocks, commodities, or currency, you can exercise an Option.