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In this Excel tutorial by John on Excel Campus, he explains how to create dynamic data validation lists that automatically update when new items are added to the source range. The process involves using Excel tables and named ranges. He begins by demonstrating how to insert a table in the source range (Products sheet) by navigating to the Insert tab on the ribbon and selecting the table option (shortcut: Ctrl + T). It’s important to ensure that the "My table has headers" checkbox is checked. Once the table is created, it will automatically include any new items added to the bottom of the list in the data validation dropdown.