One of my players created a squire, the son of a previous character, because that was the most logical choice at this point in the campaign. It will take him several years to reach knighthood and we discussed this at length before going this way. As it happens, another player saw his knight die in our last sessions, so he created a new knight which will be the mentor of the squire. Now, the books have scant information about squires and their equipment. I know the several duties of a squire but when would a squire be allowed to wear armor and which type of armor if they are entering dangerous territory where ambushes are expected? What arms was the squire entitled to bear if his mentor-knight so chooses? As the books state, squires are only expected to fight in extremis but only a fool would ride into enemy lands unarmed and unarmored. Not everyone is honorable and knights shouldn't expect their squires to be captured instead of being gutted (saxons and goblins, leap to mind). :)

I'd say any armor and arms that they can afford and their mentor agrees for them to use.

Apart from the issues like a 14-year old boy fitting into a grown man's armor, there is also the point that a squire in chainmail is very hard to distinguish from a fighting man. That means he will get more attention from even non-knightly enemies. After all, wouldn't you rather gang up on the really dangerous enemy like the knight and take him down, rather than waste your time killing/capturing a mere boy? And in the case of more knightly enemies, they don't know that the guy in chainmail is actually a young squire rather than a knight or at least a serjeant, and that first lance charge might end up in a tragedy.

It is a bit different when the squire is already approaching the knighthood, say 19 or older. At that stage, he should have his fighting skills at least adequate, and some 'real world practice' might not even go amiss. In our campaign, it is quite common for the 20 year old squires to get armored up (if they have the equipment) and have their 'graduation exam' on the field, fighting next to their knight. Showing they have what it takes to be a knight and 'winning their spurs'.

In the end, the squire is the knight's responsibility. If he is bringing the squire to a dangerous territory or into a dangerous situation, it is up to the squire's family to decide if the knight did right or wrong. And for the rest of the society to take note; a knight using his essentially untrained squires deliberately as arrowfodder to storm a gate would definitely get sanctioned by his peers, while the occasional squire getting killed in the press of battle while trying to bring a spare horse (a service that the squires are expected to do) to his knight would be just one of those things that happens.

Note that Book of Battle speaks of squires actually engaging in combat when the knights are retreating. I am not too happy about this, especially thinking how poor those 14-year old squires are. The older squires, sure, no problem there (as I said in the second paragraph), but the starting ones would be dead meat if they become combatants, especially against real knights or masses of infantry.

Oh, I might add... In our campaign, squires normally wear the 4pt gambeson (padded armor; leather armor in KAP 5.1), when adventuring with their knights. More expensive armor tends to be unavailable most of the time, save for special cases, and even then, usually worn only when the squire expects to enter battle (those graduation exams I mentioned).

Another reason is that it is all about the knight. You do not want a squire that outshines you as a knight.

So as Morien stated looking just as a servant means you are treated as a such. Even Saxons will first focus on the real threat aka the knight before gutting the servants. And a squire is a servant not a fighting man. He is going to be, but not yet.

Goblins may act differently, since they are fey and have their own ideas about threats and how to deal with it.