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Every 50th kill of this enemy drops Blood Squid Banner.they only exist because something summoned them
Blood Squids do not spawn on their own and no player item calls them. The Dreadnautilus makes them, always three at a time, while the fight with it is still going. That means you never meet one in isolation, and you should treat them as part of that fight rather than as a separate encounter. They are a Blood Moon creature in every sense: sunrise removes them, and the only way to see one again is another night with the Dreadnautilus in it.
their shots stop at walls
Each squid closes in, fires a single red bolt and recoils backward from it. Those bolts hit harder than the ones the Dreadnautilus itself throws, which is the trap, because it is easy to write off the small adds and eat three heavy hits while focused on the boss.
The difference that matters is that squid shots cannot pass through blocks, where the ones from the Dreadnautilus can. That single fact is the whole basis for handling them. Fight from a spot with terrain between you and open air and most of the incoming volume dies against the walls, leaving you dodging only the boss.
They also need line of sight and reasonable proximity to fire at all. Break either and the timer on their next shot resets, so a squid that has to spend its time swimming around a wall is a squid that barely attacks.
do not just dump damage into one
Hitting a Blood Squid shortens the wait on its next shot. Every hit pulls the timer forward a little, so pouring fire into one you were only going to kill eventually hurries along a volley you had already planned around. Either kill one outright or leave it alone, and be careful with piercing weapons that clip all three while you are aiming at the boss.
Their aim is loose. Shots land somewhere in a box around you rather than at you exactly, which means a stationary target sometimes gets missed and a moving one sometimes gets clipped by a shot that was never tracking it. Standing still is not the safe option it looks like.
running the clock
Nothing summoned during a Blood Moon survives daybreak. If the night is nearly over and the fight has gone badly, backing off is a real option, because the squids will climb out of view and vanish without you spending anything. Water slows them down despite the fact that they are squids, so a deep pool between you and them buys real time.