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In this video tutorial, Ashwin demonstrates the standardization of data using the z-score method. The formula for standardization is value minus mean divided by standard deviation. The scaled value obtained using this formula keeps the data within the range of minus 1 to plus 1, with the mean at 0. Ashwin uses the wine quality dataset to show examples of standardization and suggests using columns like fixed acidity or pH for visualization. The goal is to achieve a normal distribution within a specific range.