Conditional formatting in Google Sheets allows users to dynamically change cell text style and background color based on custom rules, making it an efficient way to make valuable information stand out. To apply conditional formatting, users first select a range of cells, then create a trigger rule (condition) that determines when the formatting should be applied, followed by selecting a formatting style from a dropdown menu. Users can also use custom formulas, color scales, and dates to create more complex rules. Additionally, multiple rules can be added to a single range, and users can copy and paste conditional formatting rules between worksheets, making it easy to apply the same formatting across different spreadsheets.