A well-established theoretical model for modular robots in two dimensions are edge-connected configurations of square modules, which can reconfigure through so-called sliding moves. Dumitrescu and Pach [Graphs and Combinatorics, 2006] proved that it is always possible to reconfigure one edge-connected configuration of $n$ squares into any other using at most $O(n^2)$ sliding moves, while keeping the configuration connected at all times. For certain pairs of configurations, reconfiguration may require $Ω(n^2)$ sliding moves. However, significantly fewer moves may be sufficient. We prove that it is NP-hard to minimize the number of sliding moves for a given pair of edge-connected configurations. On the positive side we present Gather&Compact, an input-sensitive in-place algorithm that requires only $O(\bar{P} n)$ sliding moves to transform one configuration into the other, where $\bar{P}$ is the maximum perimeter of the two bounding boxes. The squares move within the bounding boxes only, with the exception of at most one square at a time which may move through the positions adjacent to the bounding boxes. The $O(\bar{P} n)$ bound never exceeds $O(n^2)$, and is optimal (up to constant factors) among all bounds parameterized by just $n$ and $\bar{P}$. Our algorithm is built on the basic principle that well-connected components of modular robots can be transformed efficiently. Hence we iteratively increase the connectivity within a configuration, to finally arrive at a single solid $xy$-monotone component. We implemented Gather&Compact and compared it experimentally to the in-place modification by Moreno and Sacristán [EuroCG 2020] of the Dumitrescu and Pach algorithm (MSDP). Our experiments show that Gather&Compact consistently outperforms MSDP by a significant margin, on all types of square configurations.