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The video tutorial explains how to navigate between worksheets in a workbook using hyperlinks. It starts by showing the list of worksheets in the first column, where clicking on a text link selects the corresponding sheet, such as "Sales." To create a hyperlink to another sheet, like "XL n CAD," the Hyperlink function is used. The tutorial demonstrates the formula =Hyperlink(), accessed through the Insert function, which creates a shortcut to another location within the workbook. The Hyperlink function requires two parameters: the link location (the destination's address), starting with '#' followed by the sheet name, indicating where to jump when the link is clicked.