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In this video tutorial by John from Excel Campus, viewers learn how to create dynamic data validation lists in Excel that automatically update when new items are added to the source range. The demonstration starts with an existing data validation list linked to a "products" column. John explains that the key to achieving this dynamic feature involves using Excel tables and named ranges. He guides viewers to their source range, instructing them to insert a table via the Insert tab or the keyboard shortcut Ctrl + T, ensuring the "My table has headers" checkbox is selected. This process establishes a table that automatically includes any new entries in the data validation list.