I don't know how deep to dive into the explanation so apologies if I go too basic or not basic enough.
Most functions have parameters, which are values (or references to values) that are passed to the function to do some operation upon.. In many cases those parameters are references to a cell or a range of cells. In many cases an array may be used instead of a cell range, but not always. In Excel, there are a few ways to reference a range:
a) the classic or direct refence. This is often 'A1' style and looks like A1:B10 to reference the range of cells from A1 to B10. An alternative is the 'RC' style which uses Row and Column references but I won't get into here. Also with 'A1' style is relative vs absolute references so A1 is relative while $A$1 is absolute. If you copy a cell with A1 in the formula down 1 row and to the right 1 row the new cell will have B2 in that formula, but if you had $A$1 then it would stay $A$1
b) you can define a Name. A name for a range can be created by highlighting the range and typing in the box to the LEFT of the formula entry box where it normally shows which cell you are in. By typing a name there you define a name for that range. To edit or add other name you use Name Manager. Once you define a name you can use that name in place of a traditional reference.
c) You can use Table References. If you highlight a table of data you can select from the Home tab the button 'Format as a Table'. Although this looks like it is just a quick way to create a color/formatting scheme it is actually much more because that range is now defined as a table object. It is basically a special case of (b) above as you can define the Table Name (under the now visible Table menu) and you can reference the whole table or various parts of that table. Let's say you create a table called Data and have columns called Time, X, Y, Z then you can refer to whole column of Time data using the Data[Time]. As you add data to the table that reference will still be the whole set of time data. You no longer need to reference A:A and have excel looking at tons of blank rows and you don't have to use A2:A100 and worry about fixing it when you data goes past row 100.
so in my response above I used things like: [list of values in B] meaning you put in a reference to the range of all the value in the B set and that reference could be Sheet1!A1:A999 or Table1[Bvalues] or some custom name you made like ColbyDataSet. In the second formula I use: setB!A1 which is technically saying cell A1 on sheet named "setB" but meant it as a generic reference to the first cell in your dataset B. And then I used setA!$A:$B as a generic reference to the whole table of data set A starting with the lookup column to at least the column with the data you want returned. In the above case I followed that with ,2 meaning return the 2nd column but if the return data is in column D then it might be $A:$D, 4 meaning the table is in columns A through D and you want column D to return.
If you have Excel 365 I recommend the 1st formula as you don't need to 'fill down' because it is uses dynamic arrays and creates the whole array of answers using that 1 formula and all the results 'spill' down.
Again, not sure what parts you are confused about but I hope the above helps.