$a^2 - b^2 = ?$ (Formula 3)

The third formula factorizes a difference of two squares as the product of the sum and the difference of the two terms: $a^2-b^2=(a+b)(a-b)$. Expanding $(a+b)(a-b)$ cancels the cross terms $-ab$ and $+ab$, leaving $a^2-b^2$.