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In this Excel tips video, the speaker demonstrates how to calculate age in Excel using the DATEDIF function. The function takes three arguments - start date (date of birth), end date (current date), and a string indicating the value to calculate (years, months, or days). The DATEDIF function is a legacy function in Excel for compatibility with Lotus 1-2-3. By using this function, you can determine age in years, months, and days based on the input dates.