The Guild Wars 2 blog has been updated with a new post detailing how the squad system will play out in World vs World competition. Acknowledging that general chat is too broad for effective communication and that party chat was too small, the team devised the squad system to allow for better control of each world's forces.
A squad is a one-to-many command structure, with one commander at the top, and his followers underneath him. Each squad receives its own chat channel, which all members can see, but which only accepts chat from the commander. Normal members can only see what the commander says and cannot speak back.
Additionally, commanders gain access to a small set of squad map markers, which they may place on the map just like their normal party waypoint. All squad members will see these markers on their maps and compass. They represent orders such as "attack," "defend," "rally," and "bring supply."