A named reference is usually used to give a name to a cell or region of data so you don't need to remember that address when creating formulas throughout the workbook.

For example, let's say you have sales data in the region of B26:E78. You could define a named reference with a name of "SalesData" and a formula of "=Sheet1!$B$26:$E$78". Then when you need to do calculations using that data, you can use the name like this: =AVERAGE(SalesData).

But more generally, a named reference can hold any formula, so if you have a complicated region or formula string that you are going to use in many places, you might define named references for them so your other formulas can be cleaner.