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In this tutorial, Simon instructs viewers on how to reduce the size of Excel files as they grow in complexity. Excel files can range from a few kilobytes to a few megabytes, but as the data within them increases, so does their size, making them slow and difficult to share. To reduce the size of an Excel file, the video demonstrates how to save it as a binary spreadsheet. This involves navigating to the file menu, clicking on save as, entering a file name and location, selecting the Excel binary workbook option, and clicking save.