A sudden violent gust of wind or localized storm, especially one bringing rain, snow, or sleet.
The warning signs of an imminent squall are usually rain or hail, and/or a big dark cloud.
As with any storm tactics, the advice tends to depend on your boat. Generally with squalls the recommendation is to furl away the headsail and sail deep downwind, keeping the wind on the quarter to avoid an accidental jibe.
The difference between a gust and a squall? From Yachting Monthly:
A gust is a rapid increase in the wind speed relative to the mean strength at the time, and it is short-lived. A squall is a strong rise in wind speed which generally lasts for some minutes – the official definition is that the wind has to rise by at least 16 knots to a speed of greater than 22 knots and to last for at least one minute.