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To create a cell reference in Excel, start by typing an equal sign (=) followed by the cell identifier, such as A1, which allows the content of A1 to appear in another cell, like C1. To reference a cell from a different worksheet, for example, A1 from Sheet2, type an equal sign, then the worksheet name followed by an exclamation mark and the cell address: `=Sheet2!A1`. This displays the content of A1 from Sheet2 on another sheet. If the value in Sheet2 changes, it will automatically update in the cell where the reference is made. This method enables efficient cross-worksheet referencing.