When your cursor is in the "Refers to" or "Applies to" field you are in 'point mode' by default. This means that pressing navigational keys (such as up/down/left/right, home/end or page up/down) will select cells in your worksheet and insert the selected cells into your formula.
Pressing F2 toggles to 'editing mode' so that you can use the navigational keys to move the cursor rather than select a cell.
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