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In this tutorial by John at Excel Campus, he explains how to create dynamic data validation lists in Excel that automatically update when new items are added to the source range. He uses a data validation list based on a products column and demonstrates how to ensure this list incorporates any new entries. The process involves creating an Excel table from the source range. John guides users through inserting a table by accessing the Insert tab on the ribbon and using the keyboard shortcut Ctrl + T, ensuring the "My table has headers" option is checked. This establishes a table that facilitates the automatic updating of the data validation list.