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The date format is the format of entering and recognizing a date in a text field. For example, for the date format dd/mm/yyyy, 010389 will be recognized as 01/03/1989.
The default date format is dd/mm/yyyy. For the convince of the user, the current date format is always displayed near date fields, for example
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For more details on how to change date format see How to Manage User Preferences