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The video tutorial demonstrates how to bind country, state, and city tables using SQL data source control. Firstly, design a country table with an integer column for ID and a character column for country name. Similarly, create a state table with a reference to the country table and a city table with a reference to the state table. Populate the tables with data such as "US" and "UK." The state table includes columns for state ID, state name, and country ID. This task involves basic database design.