A strip of 60 color LEDs (WS2812). The strip takes only one digital pin and all LEDs are individually addressable. It works with any Arduino compatible board (including SquareWear 2.0) using Adafruit's NeoPixel library. The SquareWear 2.0 software package includes several LED_PAD demos, and the NeoPixel library is also included in the package.
Each strip has three pins on the input side: VCC (Red, operating voltage 3V to 5V), DATA_IN (White), GND (Black), and three pins on the output side (VCC, DATA_OUT, GND). Therefore it can be daisy-chained with more LED strips to make a longer strip.
To use it with SquareWear 2.0, the following connection is recommended: Red wire -> VCC, Black wire -> GND, White -> D1. The SquareWear software package has several example demos which work with the LED matrix, such as ledpad_beginner, ledpad_more, strandtest. These programs were all written assuming the Data wire is connected to D1, but you can change it to use other pins as well.
Technically, each LED has a built-in chip similar to a shift register. It works by pushing bits from a microcontroller pin to the string of LEDs at sufficient speed (800kHz). Every 24 bits (or 3 bytes) correspond to the RGB color of an individual LED. For details, please refer to the NeoPixel Guide.