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The GPT classify function helps categorize content into specific categories, differentiating from GPT tag by categorizing content into one specific category. An example is shown analyzing the sentiments of feedback for GPT for Sheets products, with categories of positive, neutral, and negative. Using GPT classify with feedback as the first argument and categories specified, output can be categorized. Output in individual columns using GPT list shows neutral sentiment, demonstrating correct categorization. By fixing categories vertically and dragging down the formula, content can be efficiently categorized into positive, neutral, and negative sentiments.