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In this video tutorial, the creator discusses how to separate first names and last names in Excel for easier sorting. By using the Text to Columns feature in Excel, users can split the names based on the space between them. This allows for sorting by last name and rearranging the names with last names first followed by a comma and then the first name. The process involves highlighting the names, going to the Data tab, and selecting Text to Columns. Excel automatically detects the space between names, making it easy to split them.