The IF() function in Excel can be used to create logical tests where an output is produced based on a specified scenario. For example, the code =IF(A1>0,"Yes","No") tests whether a number in cell A1 is greater than 0 or not. If it is, the output will be "Yes" and if it is equal to or less than 0, the output will be "No". This function can be useful in a variety of situations where conditional outputs are required.