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Data extraction is the process of retrieving data from various formats into a more useful format for further processing. It does not involve the subsequent analysis or processing of the extracted data. This technique is crucial for unlocking the value in diverse data sources, which can range from web pages to printed materials. Often, similar data sets may be extracted from different sources, requiring review and equal formatting. The video tutorial aims to clarify what data extraction is, its applications, and the methods to perform it, emphasizing the significant range of data formats available.