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In this video tutorial, Simon explains how to reduce the size of Excel files as data and complexity increase, causing the file to become slow and difficult to share. One method to reduce file size is by saving the Excel file as a binary spreadsheet, which can be done by navigating to file, clicking on save as, entering a file name and location, selecting the Excel binary workbook option, and clicking on save. This helps decrease the size of the Excel file and make it easier to share.