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In this tutorial, Simon explains how to reduce the size of Excel files as they grow in complexity and data volume. He notes that larger files can lead to slow performance and make sharing difficult. One way to reduce file size is by saving the file as a binary spreadsheet format. This can be done by navigating to the "File" tab, clicking on "Save As," entering a file name and location, and selecting the "Excel Binary Workbook" option. This helps optimize file size and improve performance.