This topic is coverd in detail in the Microsoft Excel 2007 /2010  Advanced training course:

A pivot table is an interactive worksheet table that quickly summarises large amounts of data using the format and calculation methods you choose. It is called a pivot table because you can rotate its row and column headings around the core data area to give you different views of the source data. As source data changes, you can update a pivot table.

For example, the following sheet shows  the source Employee  data .

 
This can be summarised in pivot table report that summarises the Total salary for each Job by country.

 

When you create a pivot table, you specify the data to use as row fields, column fields and page fields, and then the data you want summarised in the data area of the table. The fields and items you include from your source data determine how Excel presents the data in a pivot table.

Row Fields- Fields from the source data that are assigned a row orientation in a PivotTable report. In the preceding example, Country is a row field.
Column Fields- A field that is assigned a column orientation in a PivotTable report. In the preceding
example, Dept No is a column field.
Page Field- A field that is assigned to a page, or filter, orientation. In the example, Pensions is a page field that you can use to filter the report by Pension.
Data Field- A data field, such as Sum of Salary, provides the values that are summarised in the
PivotTable report.

Create a Pivot Table Report

Click on any single cell in your data source. This selects the data for the pivot table.

From the Insert tab and in the Tables group, select PivotTable and then choose PivotTable from the drop-down list. 

 

 

The Create Pivot Table dialog box is displayed.

 

 

Select the range of the data to be analysed and the location where the pivot table will go.

Click OK

 

 

 

 

 

Drag & drop the required fields into the various ‘zones’ corresponding to the areas of the pivot table.

 

 

 

 

 

 

 

The pivot table is created