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In this Excel tutorial, the instructor explains how to use the REPLACE function in Microsoft Excel. The REPLACE function is designed to replace part of a text string with a new string. The tutorial begins by encouraging viewers to apply the function directly in Excel, demonstrating it in cell B2. The instructor emphasizes understanding the parameters required for the function's application. The first parameter is identified as the "old text," which refers to the existing text that will be modified. The video provides guidance on correctly implementing the REPLACE function when needed.