Player Squads consist of a number of player-friendly NPCs that can be commanded, grouped and assigned objectives.
Controlling a squad
The player can have up to 4 members in a squad. However, plot-critical allies (e.g. Alyx) are excluded from this number, so essentially you can have 4+ NPCs under your command.
Also, note the small bar to the lower left of the screen. This bar represents how many members are left in your Squad, and if any are medics. Medics will have a cross symbol above their icon.
Commanding a squad
You can order members of your squad to move out by pressing the C key, pointing out the next location with your crosshair. To regroup members of the squad to your current position, double press the C key. Usually, NPCs can't be commanded too far from the player.