[guided]The square root constructed in Steps 1-4 lives in the **smallest** commutative $C^*$-subalgebra containing $x$, namely $A(x)$. We obtained it via the Gelfand isomorphism $\theta: C(K) \to A(x)$ and the **pointwise square root** of the non-negative function $f = \theta^{-1}(x)$. This gives existence and uniqueness *inside* $A(x)$.
But the theorem claims uniqueness in *all of* $A$, not just $A(x)$. So we must rule out the existence of a positive $z \in A \setminus A(x)$ with $z^2 = x$. The strategy is to **enlarge** $A(x)$ to a commutative $C^*$-subalgebra $C$ containing both $y$ and the hypothetical $z$, then run the same uniqueness argument inside $C$.
**Why does $z$ commute with $x$?** Because $z$ is Hermitian (positive elements are by definition Hermitian) and $x = z^2$, so
\begin{align*}
zx = z \cdot z^2 = z^3 = z^2 \cdot z = xz.
\end{align*}
**Why does $z$ commute with every element of $A(x)$?** $z$ commutes with $x$ (just shown) and with $1$, so $z$ commutes with every element of the polynomial subalgebra $\{p(x) : p \in \mathbb{C}[X]\}$. By continuity of multiplication, $z$ commutes with the norm-closure $A(x)$. The same argument shows $z$ commutes with $y \in A(x)$.
**Why is $C$ commutative?** $C$ is the norm-closure of the set of polynomials in $\{x, x^*, z, z^*\} = \{x, z\}$ (since $x^* = x$ and $z^* = z$). The pairs $(x, z)$ commute (just established), and each commutes with itself. Hence the polynomial subalgebra is commutative; its closure is too.
**Why does $z$ live in $C$?** By construction.
**Why does $y$ live in $C$?** Because $y \in A(x)$ (Step 3), and $A(x)$ is contained in $C$: every polynomial in $x = x^*$ is also a polynomial in the larger generator set $\{x, x^*, z, z^*\}$, and norm-closures respect set inclusion.
**Now run the previous argument inside $C$.** By the previous theorem (**Spectral Inclusions and Permanence**, part (3)), applied to the unital $C^*$-subalgebra $C \subseteq A$ and the normal element $x \in C$, we get $\sigma_C(x) = \sigma_A(x) \subseteq [0, \infty)$. Hence $x$ is positive in $C$. By the Commutative Gelfand-Naimark Theorem applied to $C$, there is an isometric $*$-isomorphism $\theta_C: C(K_C) \to C$. Let $f_C = \theta_C^{-1}(x)$, $h_C = \theta_C^{-1}(z)$. Both are real-valued and non-negative on $K_C$ (same argument as Step 2-4). And $h_C^2 = f_C$. The pointwise unique non-negative square root forces $h_C = \sqrt{f_C}$. The same applies to $y$ (since $y \in C$): $\theta_C^{-1}(y) = \sqrt{f_C}$. Hence $\theta_C^{-1}(y) = \theta_C^{-1}(z)$, and applying $\theta_C$, $y = z$.
**Why this argument cannot be skipped.** A naive approach would say "$y \in A(x)$ and $z \in A(x)$ both square to $x$, so $y = z$ by the function-algebra argument." But we have not assumed $z \in A(x)$ — only that $z \in A$. The whole point of the uniqueness statement is that the square root in $A$ does *not* depend on the ambient subalgebra in which we construct it. Enlarging to $C$ is the device that compares both candidates inside a single commutative $C^*$-context.[/guided]