Note z is the distance between the two cars at any time t. Also, x is the distance of the car on the horizontal axis from the intersection, and y is the distance of the car on the vertical axis from the intersection.
The rate we are asked to find is dz/dt.
By Pythagoras, z^2 = x^2 + y^2.
The solutions then used implicit differentiation to find z*z' = x*x' + y*y', where a prime denotes differentiation wrt time.
Since at the instant in question, we are given x, x', y and y', we can find z at that instant and thus solve to find z' at that instant.