Since ##Sq^b(u)## vanishes when ##b>1##, the only terms in the sum are ##\text{Sq}^i(u^n)\cup \text{Sq}^0(u)+\text{Sq}^{i-1}(u^n) \text{Sq}^1(u)=\binom{n}{i}u^{n+i+1}+\binom{n}{i-1}u^{n+i+1}.## So we just need to verify that ##\binom{n}{i}+\binom{n}{i-1}=\binom{n+1}{i}## (in fact we only need to check that it is true mod 2, but it is true over the integers). The number of ways of picking ##i## items from ##n+1## items is the number of ways of picking ##i## items where the first item is included (## \binom{n}{i-1} ## ways) plus the number of ways of picking ##i## items from ##n+1## where the first item is not picked (## \binom{n}{i}## ways).