The Quran

فَإِذَا انسَلَخَ الأَشهُرُ الحُرُمُ فَاقتُلُوا المُشرِكينَ حَيثُ وَجَدتُموهُم وَخُذوهُم وَاحصُروهُم وَاقعُدوا لَهُم كُلَّ مَرصَدٍ ۚ فَإِن تابوا وَأَقامُوا الصَّلاةَ وَآتَوُا الزَّكاةَ فَخَلّوا سَبيلَهُم ۚ إِنَّ اللَّهَ غَفورٌ رَحيمٌ

Muhammad Asad

And so, when the sacred months are over,¹ slay those who ascribe divinity to aught beside God wherever you may come upon them,² and take them captive, and besiege them, and lie in wait for them at every conceivable place!³ Yet if they repent, and take to prayer, and render the purifying dues, let them go their way: for, behold, God is much-forgiving, a dispenser of grace.⁴

According to a pre-Islamic custom prevalent in Arabia, the months of Muharram, Rajab, Dhu'l-Qa'dah and Dhu'l-Hijjah were considered "sacred" in the sense that all tribal warfare had to cease during those months. It was with a view to preserving these periods of truce and thus to promoting peace among the frequently warring tribes that the Qur'an did not revoke, but rather confirmed, this ancient custom. See also 2:194 and 217.
Read in conjunction with the two preceding verses, as well as with 2:190-194, the above verse relates to warfare already in progress with people who have become guilty of a breach of treaty obligations and of aggression.
I.e., "do everything that may be necessary and advisable in warfare". The term marsad denotes "any place from which it is possible to perceive the enemy and to observe his movements" (Manar X, 199).
As I have pointed out on more than one occasion, every verse of the Qur'an must be read and interpreted against the background of the Qur'an as a whole. The above verse, which speaks of a possible conversion to Islam on the part of "those who ascribe divinity to aught beside God" with whom the believers are at war, must, therefore, be considered in conjunction with several fundamental Qur'anic ordinances. One of them, "There shall be no coercion in matters of faith" (2:256), lays down categorically that any attempt at a forcible conversion of unbelievers is prohibited - which precludes the possibility of the Muslims' demanding or expecting that a defeated enemy should embrace Islam as the price of immunity. Secondly, the Qur'an ordains, "Fight in God's cause against those who wage war against you; but do not commit aggression, for, verily, God does not love aggressors" (2:190); and, "if they do not let you be, and do not offer you peace, and do not stay their hands, seize them and slay them whenever you come upon them: and it is against these that We have clearly empowered you [to make war]" (4:91). Thus, war is permissible only in self-defence (see surah 2, notes 167 and 168), with the further proviso that "if they desist - behold, God is much-forgiving, a dispenser of grace" (2:192), and "if they desist, then all hostility shall cease" (2:193). Now the enemy's conversion to Islam - expressed in the words, "if they repent, and take to prayer [lit., "establish prayer"] and render the purifying dues (zakah)"- is no more than one, and by no means the only, way of their "desisting from hostility"; and the reference to it in verses 5 and 11 of this surah certainly does not imply an alternative of "conversion or death", as some unfriendly critics of Islam choose to assume. Verses 4 and 6 give a further elucidation of the attitude which the believers are enjoined to adopt towards such of the unbelievers as are not hostile to them. (In this connection, see also 60:8-9).