Cells in an Excel sheet are individual rectangular boxes where data is entered and manipulated. They are organized in rows and columns, forming a grid-like structure. Each cell has a unique reference based on its column letter and row number. Cells can contain different types of data, such as numbers, text, dates, and formulas. They allow for calculations, formatting, sorting, and filtering of data. Cells serve as the foundation for organizing, analyzing, and visualizing data in Excel.