A short seller borrows shares from a broker, sells them into the market and owes the shares back. Closing the position means buying them again, so the profit is the fall in price less borrowing costs and any dividend paid while short.
The risk profile is inverted and uncomfortable. A long position can lose one hundred per cent; a short has no ceiling, because there is no limit to how far a price can rise. Losses grow as the position moves against you and the collateral requirement grows with them.
That asymmetry produces the short squeeze. When a heavily shorted name rallies, forced buying by shorts covering becomes the main source of demand, which drives the price higher still and forces more covering.