Effectively, yes. If an employee has 10,000 options with a $1 strike that means they can purchase 10,000 shares for $1 each. Since the shares are worth $9 the employee can then sell those shares immediately for an $8 profit, or $80,000.

As far as how many shares Square has, it's much more than 300k. That's just what they're offering to the public. That percentage is listed in their S1 filing somewhere

How many shares they started with. Who knows. Doesn't really matter.