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In this video tutorial, Mark Davis from Optimum Technology Transfer explains how to use the REPLACE function in Excel. He emphasizes the importance of text or string functions for cleaning and tidying data, referencing his previous videos on this topic. Mark demonstrates the REPLACE function with a series of order IDs, which consist of two numbers, followed by four characters and three additional numbers. His goal is to standardize these IDs by replacing the varying four characters to ensure consistency across the records.