*Without "expand references"*
=SUM(Sheet1.A1:A99)
becomes 
=SUM(Sheet1.A2:A100) 
after you inserted one new row at Sheet1, row #1. The reference moves down
one row.
When you insert one row between row #2 and row #99 the reference expands by
one row:
=SUM(Sheet1.A1:A100) 
Nothing happens when you insert directly below A1:A99 in row #100.

*With "expand references"*
=SUM(Sheet1.A1:A99)
becomes 
=SUM(Sheet1.A1:A100) 
when you insert one row anywhere between row #1 and row #100 directly below.

This applies to all formula expressions with references, namely cell
formulas, conditional format, named ranges, database ranges, chart areas,
pivot table sources, validation conditions, conditional format conditions
and form control sources (list box, combo box).

In 99% of all use cases you want this option being checked. Sometimes it can
be annoying and then it is good to know how to turn off.



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