Interpreted geometrically, the lhs is the area of a square with side-length $a+b$.
And the rhs is a combination of the areas of squares of side-length $a$ and $b$ and two rectangles with one side $a$ and the other side $b$.
The lhs is the area of a square of side-length $a$, with a square of side-length $b$ cut out.
The rectangle down the bottom can be moved over to the right, giving a rectangle of width $a+b$ and height $a-b$, which has an area $(a+b)(a-b)$: