Usage of Dummy Variables / One Hot Encoding is applicable in the case of Categorical Variables which are Nominal in Nature.
Nominal variables are the one's those does not have any order representation.
Source: https://www.youtube.com/watch?v=9yl6-HEY7_s&list=PLeo1K3hjS3us_ELKYSj_Fth2tIEkdKXvV&index=45

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