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"Not stated explicitly, but definitely shown in the data, the named range States must be sorted by the values in the first column. The formulas won't work at all if the tables aren't sorted"The suggested formula is returning a contiguous range of cells from the second column. Those cells won't be contiguous if the table hasn't been previously sorted by its first column. The formula uses INDEX and MATCH to find the first cell in the range, and COUNTIF and INDEX to find the number of values to display in the dropdown. If the table isn't sorted by its first column, the dropdown will have a correct value at the top of the list, but may have an embarrassingly incorrect set of values for the remainder.
http://www.contextures.com/xlDataVal13.html "Dependent Dropdowns from a Sorted List "
http://www.contextures.com/xlDataVal02.html "Create Dependent Drop Down Lists" using named lists with INDIRECT
http://www.contextures.com/xlDataVal15.html "Excel Data Validation -- Create Dependent Lists With INDEX" also uses named lists, only with INDEX