Most formulas you create include references to cells or ranges. These references enable your formulas to work dynamically with the data contained in those cells or ranges. For example, if your formula refers to cell C2 and you change the value contained in C2, the formula result reflects new value automatically. If you didn’t use references in your formulas, you would need to edit the formulas themselves in order to change the values used in the formulas.
When you use a cell (or range) reference in a formula, you can use three types of references − relative, absolute, and mixed references.
The row and column references can change when you copy the formula to another cell because the references are actually offsets from the current row and column. By default, Excel creates relative cell references in formulas.
The row and column references do not change when you copy the formula because the reference is to an actual cell address. An absolute reference uses two dollar signs in its address: one for the column letter and one for the row number (for example, $A$5).
Both the row or column reference is relative and the other is absolute. Only one of the address parts is absolute (for example, $A5 or A$5).