War is certainly prescribed in the Quran, and this is far from being the only verse which talks about it. I doubt that anyone would disagree with this statement, however some people may disagree on the prerequisites and other laws related to it.
كتب عليكم القتال وهو كره لكم وعسى أن تكرهوا شيئا وهو خير لكم وعسى أن تحبوا شيئا وهو شر لكم والله يعلم وأنتم لا تعلمون
Fighting has been enjoined upon you while it is hateful to you. But perhaps you hate a thing and it is good for you; and perhaps you love a thing and it is bad for you. And Allah Knows, while you know not.
— Quran 2:216
The translation of the verse that you have quoted is by Yusuf Ali and it is fine IMO. You can cross-reference with other translations such as Saheeh International, Muhammad Taqi-ud-Din al-Hilali & Muhammad Muhsin Khan , Pickthall, Mufti Taqi Usmani etc.
For an indepth explanation of the verse you can refer to Tafsir Ibn Kathir - (Abridged English Translation) or the Arabic tafsirs such as Tafsir Ibn Kathir, Tafsir al-Qurtubi, Tafsir al-Baghawy etc. Below I will make a summary of what is recorded in the above linked works of exegesis.
The first few verses of Surah at-Tawbah were revealed after the conquest of Makkah, for the occasion of the first Hajj under Muslim rule, in the year 9 AH (see verse 9:3).
At this point in time the prophet had treaties (i.e. non-aggression pacts) with various pagan tribes. These treaties had various expiry times. Some did not specify any duration, some were due to expire in less than four months, and some were due to expire in more than four months.
Surah at-Tawbah laid down the schedule to retire these treaties and make a declaration of war:
- Those people who did not have a treaty were given time of four months
- The treaties which were going to expire in less than four months, were extended to four months.
- Those which did not have a specified duration were limited to four months (see verse 9:2 for all of the above).
- Those which had a limited duration but were due to expire in more than four months, were to be respected until their duration was complete (see verse 9:4).
Exegesis of the words and phrases in verse:
فإذا انسلخ الأشهر الحرم فاقتلوا المشركين حيث وجدتموهم وخذوهم واحصروهم واقعدوا لهم كل مرصد فإن تابوا وأقاموا الصلاة وآتوا الزكاة فخلوا سبيلهم إن الله غفور رحيم
And when the sacred months have passed, then kill the polytheists wherever you find them and capture them and besiege them and sit in wait for them at every place of ambush. But if they should repent, establish prayer, and give zakah, let them [go] on their way. Indeed, Allah is Forgiving and Merciful.
— Quran 9:5 - Saheeh International Translation
(And when the sacred months have passed then)
According to the most accepted view this means the truce period i.e. the four months mentioned in verse 9:2, the commands in this verse was to be carried out after this period of respite had elapsed.
This is a categorical prescription to kill the disbelievers, and has been cited as evidence for executing prisoners of war. While it implies permission to kill regardless of the method, however the majority hold that the sunnah specifies that inhumane methods such as torture, mutilation and burning should be avoided when possible.
Mushriqeen is a generic category that is inclusive of all the disbelievers. However there are some exceptions in this law which are proven from other texts:
- Dhimmi. A person from the people of the book (follower of Judaism or Christianity) who has agreed to pay Jizyah. That is because verse 9:29 applies to these people.
- Musta’min . This is an individual who requests temporary asylum. This is because they have been excluded in 9:6.
- Mu‘aahid. This is someone who has an extant truce. They have been excluded in 9:4.
- Women and children. They can not be killed as they excluded by the hadith. Most madhabs also add to this the disabled, old men and monks.
(wherever you find them)
This includes the permission to fight and kill them wherever they may be in terms of location and time. This is significant because the law beforehand was that fighting was forbidden within the precincts of the Masjid al-Haram and during the months of Rajab, Dhu’l-Qa’dah, Dhu’l-Hijjah and Muharram.
(capture them and)
This permits taking prisoners.
(besiege them and)
This permits laying siege to their settlements. And it may also mean placing restriction on their entry into the Islamic state.
(But if they should repent, establish prayer, and give zakah, let them [go] on their way)
Meaning if they should accept Islam then they can no longer be killed, kept imprisoned, besieged or ambushed.
This part of the verse is also used as evidence for fighting against those who refuse to pay Zakat (as done by Abu Bakr) and for the legal punishment on those who abandon Salah.