This project uses the "Babylonian method" of calculating square roots. It takes an original guess number (in this case 1) and then divides the original number by the guess. After that, it averages that result with the guess, producing a new guess. It converges to an answer very quickly, partly due to the low number of digits Scratch displays after the decimal point. The original number is the number you wish to find the square root of, and the number of iterations is how often the above process is repeated.
Just a quick thing I felt like making because of a Vsauce video.