Each poistion on a spreadsheet has a cell reference point and when doing formulas, this is the reference point.

Rows are numerical.

Columns are Alphabetical.

Top left (where F8 is shown) notes the active cell. In the Formula Bar is the value (or the formula being used ), in this case it is the value.

To multiply the value of B5 x the value of G5. The reason it is done like this, is because it allows you to change the values without having to re-do the formulas. See example two below.

The only thing that has changed is the value of G5.