<s>[INST] explain how to factor (x^2 - y^2). [/INST] Here are the steps to factor (x^2 - y^2):

1. Find the greatest common factor of the terms. In this case, the GCF is 1. So we proceed to the next step.

2. Look for a binomial factor. We need to find two terms whose product is (x^2 - y^2). 
Since this is a difference of two squares, we can factor it as:

(x^2 - y^2) = (x - y)(x + y)

3. Therefore, the factored form of (x^2 - y^2) is:

(x - y)(x + y)

Does this make sense? Let me know if you have any other questions! </s>