I need to explain this to someone.
I know obviously the expanded form gives you $x^2 + 2xy + y^2$ but technically don't the individual exponents multiply to give $x^2 + y^2$
I might say I'm looking for an interesting geometrical explanation for this.
Any help is appreciated!

I'm going to assume that you're familiar with the expansion of$$(a+b)(c+d)=a(c+d)+b(c+d)=ac+ad+bc+bd\tag1$$ With $(x+y)^2$, since the definition of an exponent is that $a^n=\underbrace{a\cdot a\cdot a\cdots a}_{n\text{ times}}$. Hence,$$(x+y)^2=(x+y)(x+y)=x(x+y)+y(x+y)=x^2+xy+yx+y^2\\=x^2+2xy+y^2$$