Formula Fields in Salesforce plays a vital role to derive data in run time. Formula fields calculates the values in runtime when they are queried and viewed.

Salesforce Formula editor provides all the supported Functions to manipulate and extract the data.

1. To create a percentage from 2 numeric fields.

2. To create a clickable hyperlink for easy access to important information from a record’s page layout.

3. To calculate the number of days between two dates.

4. Extract data pattern from existing values.

Limitations:

https://help.salesforce.com/s/articleView?id=sf.formula_field_limits.htm&type=5