When creating an Excel formula what does the cell reference with dollar signs like A1 do?

In Excel, a cell reference with dollar signs, such as $A$1, denotes an absolute reference. This means that if you copy the formula to another cell, the reference will not change and will always point to cell A1. In contrast, a relative reference like A1 would adjust based on the position of the cell where the formula is copied. This feature is useful for maintaining specific references in calculations across different cells.