Squad Mode was the second optional Game Mode introduced into Marine Arena, which puts unit capacities on your Marines and Mercenaries.
Currently, the capacities are:
No Unit Shop
Squad Mode is only popular among select groups, and is sometimes referred to as "Lag-Free Mode", since there are such low numbers of units in the map compared to Classic Mode.
There is also stronger emphasis on the use of Heroes, since most heroes are equivalent to a considerable sized marine or merc army.
This game mode was originally created by Olat, and has been refined and revised by Crayon since it was first added. It is also still subject to change to have Merc Caps based on the tier of Merc spawning (eg. T1 Increases cap by 1 per unit, T2 by 2, etc.)