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Data exists in various formats, from web pages to printed materials, and holds significant value. Data extraction is essential for unlocking this value by converting data from one format to a more useful one for further processing. This process differs from data processing or analysis, which occurs post-extraction. In some cases, similar datasets may be extracted from different sources, necessitating a review to ensure consistent formatting. The video will also cover the different types of data sources, emphasizing the diverse formats in which data can exist. Overall, data extraction is a crucial step in managing and utilizing data effectively.