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In this video tutorial, John demonstrates how to split date and time values stored in a single Excel cell into two separate cells. He highlights that simply formatting the cell to display only the date won't change the underlying data, which can cause issues with categorizing or looking up dates. To resolve this, John introduces the use of the ROUNDOWN formula to effectively separate the combined date and time into distinct columns: one for the date and another for the time. This process helps in managing data better and avoids potential problems when performing data analysis or categorization.