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The video tutorial discusses the three biggest mistakes in recessed lighting: selecting the wrong fixture, placing it incorrectly, and inadequate budgeting. It emphasizes the importance of choosing the right fixture, noting there are various types of recessed lights, including can lights and pot lights. A recessed light consists of three main components: the housing (the unseen part installed in the ceiling), the trim kit, and the bulb. The housing is considered the most crucial and often the most expensive component, although some trim kits can also be costly. The video further explains the differences between incandescent and low voltage options, which require their own transformers.