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It's not a simplification, it's wrong. Sqrt(square(x)) equals abs(x).
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It also equals x with appropriate assumptions (x > 0).
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Well, then sin(x) = x if x is infinitely small
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so there's an unconditionally correct answer (it's also equal to abs(x) for x>0), and then there is an answer that is only correct for half the domain, which requires an additional assumption.
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sqrt(square(i)) != abs(i)

So no, it’s not unconditionally correct either.

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Not in general. As people have pointed out elsewhere, it's true if x is real. That isn't always a helpful assumption. (When x is real you can plug that assumption into Mathematica. Then Mathematica should agree with you.)

But consider sqrt(i) = sqrt(exp(i\pi/2)). That's exp(i\pi/4). Your rule would give 1 as the answer. It's not helpful for a serious math system to give that answer to this problem.

When I square 1 I don't get i.

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