This is unusual but there are instances where a squirrel will do this, as in humans there are animals that have cannibalistic tendencies, also, if a male squirrel wishes the female to mate again he will kill and eat their young so she will want to reproduce again (in other words he does this so she has sex with him), another reason could be that there was something wrong with the baby, ORRR another squirrel if hungry enough will kill another for food,
also mother squirrels will kill other babies from another nest that is unattended so that their babies will have more food, one less squirrel, more food for her babies...
I know that African Lions do this often, when a new male arrives at the Pride and takes over, He will kill all the young and copulate with the females so his gene pool will rule the Pride.
Gotta love nature.