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The video by Trump Excel demonstrates how to filter data in Excel based on a drop-down list selection. The tutorial uses a dummy data set with product names, sales rep names, and country names. By selecting a country from the drop-down list, relevant records for that country are extracted. This method eliminates the need to apply filters directly to the data set, which can be cumbersome and has drawbacks. The process shown is efficient and updates dynamically with each country selection.