Like most FM radios made today, you have several options with respect to squelch. The following is a little more complex than I present it, but I think you'll get the idea.
There is digital squelch and sub-audible squelch. These can be set on transmit only, receive only, or both. Typically, only one type is used for any one given repeater (frequency).
When they are set for transmit, the transmitted code or tone is sent with each transmission thus "keying" the repeater. In this case, if they are not set for receive too, you hear all of the transmissions from the repeater.
If you have a specific digital code set up, then the only transmissions you hear are the ones for you.
Most of the time, sub-audible tones are used to minimize interactions between repeaters which may be on the same frequency and/or reduce intermod trips.
The front panel squelch knob essentially sets the minimum signal level required to open your receiver so you can hear any specific transmission.
As I said, there is a lot more to it, but this should get you started.