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In this Excel tutorial, John demonstrates how to separate date and time stored in the same cell using the ROUND DOWN formula. He shows that while changing the formatting to exclude time may visually alter the data, it does not change the underlying storage, which can lead to issues when categorizing or using lookups. Instead, he recommends splitting the combined date and time into two separate columns: one for the date and another for the time. This method ensures accurate data categorization and functionality for further analysis.