As several of the other comments have stated, the claim is wrong in general. I believe the idea here is that by choosing appropriate $x$ and $y$, we may be able to simplify an expression of the form $\sqrt{p+q\sqrt{r}}$.
Note that squaring both sides of the given equation yields
$$\begin{align}
a + \sqrt{b} &= x + y + 2\sqrt{xy} \\[2mm]
&= x + y + \sqrt{4xy}
\end{align}$$
Now if we can find naturals $x$ and $y$ such that $\; a = x + y \;$ and $\; b = 4xy \;$ then we would be able to simplify $\sqrt{a+\sqrt{b}}$.
In particular, to simplify the given $\sqrt{84+16\sqrt{17}}$ we first note that we can factor out a 2 and rewrite as $2\sqrt{21+4\sqrt{17}} = 2\sqrt{21+\sqrt{4 \cdot 68}}$; thus we are looking for natural solutions to the system $x+y=21$ and $xy=68$.
This is relatively straightforward:
$$\begin{align}
(x-y)^2 &= (x+y)^2 - 4xy \\[2mm]
&= 21^2 - 4(68) \\[2mm]
&= 169 \\[2mm]
x-y &= 13
\end{align}$$
which then combining with $x+y=21$ easily yields $x=17$ and $y=4$.
Thus
$$\begin{align}
\sqrt{84+16\sqrt{17}} &= 2\sqrt{21+4\sqrt{17}} \\[2mm]
&= 2 \left( \sqrt{17} + \sqrt{4} \right) \\[2mm]
&= 4 + 2\sqrt{17}
\end{align}$$
Addendum:
Initially I felt the claim was useless in answering the second part; however after I wrote the above solution I realized it could be used in the following way: if we let, as above, $a = x + y$ and $b = 4xy$, then
$$\begin{align}
a - \sqrt{b} &= x + y - \sqrt{4xy} \\[2mm]
&= x + y - 2\sqrt{xy} \\[2mm]
&= \left( \sqrt{x} - \sqrt{y} \right)^2
\end{align}$$
and therefore
$$\begin{align}
x - y &= \left( \sqrt{x} + \sqrt{y} \right) \left( \sqrt{x} - \sqrt{y} \right) \\[2mm]
&= \left( \sqrt{a + \sqrt{b}} \right) \left( \sqrt{a - \sqrt{b}} \right) \\[2mm]
&= \sqrt{a^2 - b}
\end{align}$$
which would then yield the same $x-y=13$ as above.