There is certainly a distinction made in the reference that was posted.
Sidney Smith was commanding a squadron and that term is continually used throughout the correspondence, a primary source. And the Portuguese warships, along with the merchant vessels leaving Lisbon for Brazil is termed a fleet.
Apparetnly, you are relying on a secondary source. The primary material posted states differently.
A squadron is a smaller naval unit than a fleet (please refer to the naval definitions posted previously) and is a subdivision of a fleet. Seems to me that is quite evident. Sidney Smith was a naval squadron commander, not a fleet commander-those are two different billets.