What does the Hadith mean by fight them? Does it involve blood, just seizure of property or enslavement of the women and children of the family? Please elaborate on all three (if applicable)
This is what it means...
Fight against those who (1) believe not in Allah, (2) nor in the Last Day, (3) nor forbid that which has been forbidden by Allah and His Messenger (4) and those who acknowledge not the religion of truth (i.e. Islam) among the people of the Scripture (Jews and Christians), until they pay the Jizyah with willing submission, and feel themselves subdued. (Qur'an 9:29)
So, the motto was to collect Jizya from them in order to make them feel subdued (If a person is subdued, they are not as happy as usual or they are unusually quiet - Cambridge Dictionary). If they refused to pay it, then fighting until the rule was followed/acted upon.
Does it involve blood?
just seizure of property
I don't think so. because the verse clearly says 'willing submission' meaning they voluntarily agree to give the money, not forcefully taking it from them.