Using functions & formulas allows you to perform calculations on the data you have entered. You can add up lists of data, multiply, subtract, find averages, plot charts, all depending on what your spreadsheet is analysing.
Excel also has several different types of data, known as data types. These can be numeric such as whole numbers called integers (eg 10), numbers with decimal points (eg 29.93), currencies (eg £4.67 or $43.76), as well as date and time, text and so on. This helps Excel, process and display data correctly.