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In this video tutorial, Simon demonstrates how to reduce the size of Excel files. Excel files can vary in size from kilobytes to megabytes, which can slow down performance and make sharing difficult. One way to reduce file size is by saving it as a binary spreadsheet. To do this, go to File, Save As, enter a file name and location, and select Excel binary workbook from the save options. This will help to optimize the file size and improve overall performance.