how is this possible? I know there is some trick, should someone please explain?!
This is a very well known optical illusion. Count the number of squares in each triangle (or at least in each non-vertical or non-horizontal line) and you'll see that they don't have the same slope. Therefore the triangles cannot magically ''fit'' as they seem to do so.
The slope of green and red is 3/8 (0.375), where as the slope of blue and orange is 2/5 (0.4). These numbers are quite close so it's easy to hide one square unit. But the slopes cannot fit the way they look like they do.
Hope that helps,
The gradient of the green triangle is not the same as the blue quadrilateral, this creates the overlap. Try to calculate the gradient (rise over run) of each sloping side yourself. Since it isn't equal, there is some overlap in the second figure, thus the "extra" square is hidden in the small overlapping sliver.