This is a subtle point about variable use. Basically, we're treating $-^2$ as a unary function: "$x^2$" is going to play differently with interval arithmetic than "$xx$."
Writing "$sq(-)$" to avoid conflation with Cartesian products, we have by definition $$sq([-1,1])=[\min\{a^2: a\in [-1, 1]\}, \max\{a^2: a\in [-1,1]\}]=[0,1].$$ Note that the numerical term occurring inside the $\min$/$\max$ operators (namely "$a^2$") has only one variable.
By contrast, as you correctly observe if we plug in the interval $[-1,1]$ for $x$ in the expression "$xx$" we get $[-1,1]$. This is because the term "$xx$" has two occurrences of the variable "$x$," so to calculate $[-1,1]\cdot [-1,1]$ we wind up looking at the expression $$[\min\{a\cdot b: a\in[-1,1], b\in [-1,1]\}, \max\{a\cdot b: a\in[-1,1], b\in [-1,1]\}].$$
It may help to go a bit more general. Any $n$-ary function $f:\mathbb{R}^n\rightarrow\mathbb{R}$ whatsoever has a "set-ified" analogue $\widehat{f}:\mathcal{P}(\mathbb{R})^n\rightarrow\mathcal{P}(\mathbb{R})$ defined by $$\widehat{f}(X_1,...,X_n)=\{f(a_1,...,a_n): a_1\in X_1,...,a_n\in X_n\}.$$ Certain "nice" choices of $f$ take intervals to intervals, but this is really just a particularly nice part of the overall "extended function landscape." Conversely, if we fix a particular kind of set in advance (such as "intervals" in this case), we get a corresponding notion of "shape-preserving function." This is a wild digression, but I think it helps some readers to situate interval arithmetic in a more abstract context.