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In this YouTube tutorial, the presenter explains how to reduce the file size of an Excel file from 16.4 mb to less than 50 kb. They mention that the file should be in tabular format with rows and columns and no blank spaces in the top rows or right. They demonstrate the process using a downloaded file containing data on series, reference period, data value, status, dollars, etc. The first step is saving the CSV file as an Excel file by going to File > Save As and changing the format. This reduces the file size to 3.18 mb.