What is the difference between absolute and relative cell references in Excel?

In Excel, the distinction between absolute and relative cell references is crucial for managing and manipulating data efficiently. Absolute references are defined with a dollar sign before the column letter and the row number (e.g., $A$1). This notation ensures that when you copy a formula that includes an absolute reference, the reference to that specific cell remains unchanged, regardless of where the formula is pasted in the worksheet.

On the other hand, relative references, which do not have dollar signs (e.g., A1), are designed to change based on their location when a formula is copied. For example, if a formula in cell B1 references A1 as a relative reference and is then copied to B2, the reference will automatically adjust to A2.

Understanding this functionality allows users to effectively manage data calculations across different cells without manually adjusting each reference, greatly improving efficiency in spreadsheet work.