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This lecture covers the concept of passing by reference in functions, demonstrating how a function can modify a variable passed as an argument. It explains the advantages of passing by reference, such as transparent memory access, and discusses the performance implications compared to passing by value. The lecture also delves into the scope and lifetime of local variables within a function, detailing the organization of memory during program execution. Additionally, it includes a code example to illustrate the differences between passing by reference and passing by value, emphasizing the importance of adding 'const' to prevent variable modification.