- The first identity in this passage was verifed algebrically by me, and I also suspect it might beis intimately connected with quaternions - actually it is a kind of pre Cayley-Dickson construction, since Gauss essentially says here that the quaternions multiplication rules arise from the rules of complex arithmetic and can be constructed by them. To see this more clearly, lets make the following steps:
$$Nl+Nm=N(l+mj)=N(l-mj)$$ $$N\lambda+N\mu = N(\lambda+\mu j)=N(\lambda+j\mu)$$
Since the quaternions algebra is a composition algebra, the norm is multiplicative, so: $$N(l-mj)\cdot N(\lambda+j\mu) = N((l-mj)\cdot(\lambda+j\mu)) = N((l\lambda -(mj)(j\mu))+l(j\mu)-(mj)\lambda) = N((l\lambda+m\mu))+l(\bar{\mu}j)-m(\bar{\lambda}j)) = N((l\lambda+m\mu))+(l\bar{\mu}-m\bar{\lambda})j) = N(l\lambda+m\mu)+N(l\bar{\mu}-m\bar{\lambda})$$
Here the associativity of quaternions is used, as well as the fact that (for example) $j\mu = \bar{\mu}j$. For more on Gauss's anticipation of the quaternions algebra, look at the (partially answered) post Motivating unpublished statements of Gauss about congruences and quaternions.
- The second identity follows directly from the first by substituting $\lambda = 1-i$ and $\mu = 1+i$. Since $N(1-i)+N(1+i)=4$, this identity enables one to generate new representations of an integer $4s$ as sum of four squares by simply changing the signs and order of the different numbers in the representation of $s$ as sum of four squares. For example, if $s = 13 = 2^2+2^2+2^2+1^2$ than this identity implies $52=4s = 5^2+3^2+3^2+3^2$.