The EDID (Extended Display Identification Data) button allows a display device to send important information about its capabilities to a source device. This information includes details like resolution, refresh rate, color space, audio format, and more. When the source device receives this data, it can generate a signal that matches the requirements of the display device. This ensures optimal compatibility and performance between the two devices. EDID is essential for proper communication and seamless interaction between the source and display devices. By pressing the EDID button, users can access and manipulate these settings to ensure the best possible viewing experience.