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In this tutorial, Simon demonstrates how to reduce the size of Excel files as the data and complexity increase. Excel file sizes can range from kilobytes to megabytes, which can lead to slow performance and difficulties in sharing. One way to reduce the file size is by saving it as a binary spreadsheet format. This can be done by navigating to the file, clicking on save as, entering the file name and location, selecting the Excel binary workbook option, and clicking on save.