Scrunching out the crunch means to break your gel cast with your hands.

Each curl gets locked in by gel as it dries to form a cast, (your curly hair must be 100% dry before you scrunch out the crunch). This gives curls their defined shape.

This cast needs to be broken to release the curls, and that is where the term "scrunch out the crunch" comes to play. With each scrunch of your hands, the gel cast is broken, revealing very soft curls.