The verse says:
"O Prophet (Muhammad SAW)! Strive hard against the disbelievers and the hypocrites, and be harsh against them, their abode is Hell, - and worst indeed is that destination." (9:73) The Holy verse is an order to prophet Mohammad, peace and blessings be upon him, to "STRIVE" against two groups of people namely, the disbelievers and the hypocrites.
What does "STRIVE against the disbelievers" mean?
First of all the word "strive" involves action between two sides, so again it is not a single sided step. According to the explanation of the verse by Sheikh Sharaawy, the famous sheikh, "STRIVE" first start by trying to argue with them and fight them not by the sword but by reason may be they will reconsider their ways. If they still insist on fighting against Islam then comes the word "be harsh against them" which means again NOT fighting by the sword but by showing them what punishment awaits them in the afterlife, may be that would warn them to give up their stubbornness .
What is the Prophet, peace and blessings be upon him, fighting them for. Is it to become Muslims by force. NO, actually the "STRIVING" here is to convince them not to fight against the spread of Islam. If a disbeliever lives in an Islamic state, he is TOTALLY FREE to be a Muslim or stay a disbeliever , but he is not allowed to fight the state. The proof of this is evident in the verse " And say: "The truth is from your Lord." Then whosoever wills, let him believe, and whosoever wills, let him disbelieve." (18:29).
The disbeliever living in an Islamic state has the right to choose either to be a Muslim or stay a disbeliever but live in peace with the Muslims, then Muslims are not allowed to fight him in any way except by trying to convince him using reason and he would have to face the consequences of his choice in the afterlife. The last option is to stay a disbeliever and fight or conspire against Islam and the Muslims then you will be fought by the Muslims.
The second option is the one discussed in the above verse, Try to convince them using reason to believe or else "be harsh against them" meaning show them the consequences they will face in the afterlife if they insisted on disbelieving.
What does "STRIVE against the hypocrites" mean?
The hypocrite is someone who claimed to be a Muslim, but deep inside him he was an enemy to Islam. This is worse than the disbeliever and more dangerous. The disbelievers who fought Islam is a clear enemy but the sly hypocrite is more dangerous as he claims to be a devout Muslim so he can spread rumors or conspire against the Muslims without them expecting it.
The hypocrites had a pattern of attitude. They would do something wrong then deny completely doing it. This is evident in the verses like
"And they swear by Allah that they are from among you while they are not from among you; but they are a people who are afraid." (9:56)
"They swear by Allah to you (Muslims) in order to please you, but it is more fitting that they should please Allah and His Messenger (Muhammad SAW), if they are believers." (9:62)
"They swear by Allah that they said nothing (bad), but really they said the word of disbelief, and they disbelieved after accepting Islam, and they resolved that (plot to murder Prophet Muhammad SAW) which they were unable to carry out, and they could not find any cause to do so except that Allah and His Messenger had enriched them of His Bounty. If then they repent, it will be better for them, but if they turn away, Allah will punish them with a painful torment in this worldly life and in the Hereafter. And there is none for them on earth as a Wali (supporter, protector) or a helper." (9:74)
So their enmity reached the level of conspiring to kill the prophet, peace and blessings be upon him, but they always denied their acts, every time our merciful prophet, peace and blessings be upon him, would excuse them and accept their denial even though he knew they did what they were accused of. So in the verse (9:73) God is ordering him to punish them for the acts they do. The order here is to punish according to the guilt that they denied not to kill them.
Where is the mistake here?, where is the violence in punishing someone for his deeds, the deeds that he did by his own free will? Not punishing them for the small mistakes that they kept denying (like uttering the word of disbelief) made them increase in their enmity to the level of conspiring to kill the prophet, peace and blessings be upon him, so what is wrong in changing the attitude towards them by punishing them for the crimes they committed?