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In this tutorial, Simon explains how to reduce the size of Excel files as data is added and complexity increases. Excel file sizes can vary from kilobytes to megabytes, with larger files becoming slow and difficult to share. One way to reduce file size is by saving it as a binary spreadsheet. To do this, go to File, Save As, enter file name and location, choose Excel binary workbook, and click Save. This will help to optimize Excel file sizes for better performance and sharing capabilities.