Square craft around naval unit (8)
I believe the answer is:
squadron
'naval unit' is the definition.
'square craft around' is the wordplay.
'square' becomes 'sq' (abbreviation for square in postal addresses).
'craft' is an anagram indicator (letters must be crafted into a new form).
'around' anagrammed gives 'uadron'.
'sq'+'uadron'='SQUADRON'
(Other definitions for squadron that I've seen before include "Military unit" , "RAF unit" , "Air force grouping" , "Cavalry unit" , "detachment" .)