How do I handle variables in Mathematica?

[cell]

Hello,
I'm just testing out mathematica for the first time. I was hoping someone could help me make sense of this input (see attached screenshot). I'm sure I'll be running into more peculiarities as I get more comfortable with the software, Ill post them in this thread as the pop up.
Help much appreciated.
Cell

 

[cell]

Hi, I see now, it treated xy as one variable