In cell B3 type:
2 + 2
Notice the results,
no calculation occurs because this cell is being interpreted as
"labels".
Now go to cell C3 and type:
= 2 + 2
You should see the number 4.
Formulas can also reference other cells:
Go to cell C4 and type:
= C3 + 5
You should see the number 9 in cell C4 (value of 4+5)
Go to cell B4 and write a formula with reference to cell B3
You should see the error: #VALUE!
This means that cell B3 contains labels. Therefore, referenced cell must contain a value.