The text discusses the importance of the train-validation-test split in developing machine learning models that generalize well to new data, emphasizing the need to keep training, validation, and test datasets separate to avoid bias and overfitting. It outlines the roles of each dataset: the training set is used to fit the model, the validation set helps fine-tune the model's hyperparameters and assess its generalization capabilities, and the test set provides an unbiased evaluation of the model's performance. Three methods for splitting datasets—random sampling, stratified dataset splitting, and cross-validation—are presented, along with common mistakes to avoid, such as inadequate sample size and data leakage. The text highlights Encord's platform as a tool for managing and splitting datasets, using the COCO dataset as an example, and offers insights into ensuring balanced and effective data splits for machine learning projects.