You can take the two variables to be outcomes of a binomial event:

- at zero events: we have one outcome, nothing

- at one event: we have two outcomes, 1X and 1Y

- at two events, each of those two outcomes have two outcomes, but one X and one Y outcome both become XY, so we have 1X^2 2XY 1Y^2.

You can continue combining this way, adding an X and Y to each term (for the two possible outcomes) — and then grouping like terms.