PowerPivot allows importing data from a SQL Server database into Excel sheets for reporting and analysis. It creates a multidimensional data model to relate fact and dimension tables, enabling self-service business intelligence without advanced skills. PowerPivot can save the data model as a cube in SQL Server Analysis Services for additional reporting capabilities. The user demonstrated connecting to a database, selecting tables, renaming sheets, and using PowerPivot to create a dimensional model and run a sales report across states.