Squats alone won't directly target and reduce thigh fat. Spot reduction, the idea that you can target fat loss in specific areas, is a myth.
When you exercise, you burn calories overall, leading to fat loss throughout your body, including your thighs. Squats are a great exercise to build muscle in your legs, including your thighs.
Muscle is denser than fat, so as you build muscle in your thighs, they might appear smaller and more toned, even if you don't lose a significant amount of fat.
To effectively reduce thigh fat, you need to focus on a calorie deficit, meaning consuming fewer calories than you burn.
Combining squats with a healthy diet and other exercises that target different muscle groups can contribute to overall fat loss and a more sculpted physique.
