Differentiation approximates values by using the slope of the tangent line to a curve, which provides a close estimate to the actual function value. In the case of finding the cube root of 8.03, the derivative at 8 indicates how the function behaves near that point, resulting in an approximate value that is slightly larger than the true value. The discussion highlights a gap in understanding calculus concepts beyond formulas, emphasizing the importance of grasping the underlying principles. Many textbooks provide formulas without sufficient explanations, leading to confusion among students. Understanding the relationship between the tangent line and the curve is crucial for better comprehension of calculus.