index.html
<html>
<head>
  <title>XXX</title>
  <link rel='stylesheet' href='styles.css'>
  <script src='functions.js'></script>
</head>
<body>
  <div id='grid'>
    <script>squares();</script>
  </div>
</body>
</html>

You'll notice that I've decided to store all my functions in one file. This is how I usually work. I keep them in alphabetic order.

functions.js
function squares() {
  var id=0;
  var s1="<div id='";
  var s2="' class='square' onClick='square_clicked(this);'></div>"
  for (var r=0;r<3;r++) {
    document.write("<div class='row'>");
    for (var c=0;c<3;c++) {
      document.write(s1+id+s2);
      id++;
    }
    document.write("</div>");
  }
}