That's not what it simplifies to using a real or complex number domains for x, it's abs(x). CAS need type inference assumptions and/or type qualifiers to be more powerful.
For x = -i, square(x) = -1, sqrt(square(x)) = i. Meanwhile, abs(x) = 1. You're right that it simplifies to abs(x) for real x, but that no longer holds for arbitrary complex values.
so there's an unconditionally correct answer (it's also equal to abs(x) for x>0), and then there is an answer that is only correct for half the domain, which requires an additional assumption.
Edit: Fixed stuff.