For example, I have a fruit sales table in Excel as below screenshot shown. And I will apply the Colored Drop-down List feature to highlight cells based on the drop-down list selections easily as follows:

1. Click Kutools > Drop-down List > Colored Drop-down List to open the Colored Drop-down list dialog.

2. Now a dialog comes out and asks whether the data range contains drop-down list.
A. If your data range doesn't contain drop-down list, please click the Yes, please help me to create option;
B. If your data range contains drop-down list, please click the No, I know the Data Validation feature option, and then skip to the Step 4.

3. In the Create simple drop down list dialog, please add drop-down list as follows:
(1) In the Apply to box, please select the column you will add drop-down lists for. In my example, I select the Fruit column in the table;
(2) In the Source box, check Enter a value or referene a cell value option, then choose the data source or manually type in the values separated with comma, such as "Peach,Pear,Mango,Grape,Orange,Apple". Or check Custom Lists option, and choose the list from right pane.
(3) Click the Ok button.
 

4. Now the Colored Drop-down list dialog opens, please configure as follows:
(1) Tick the Cell of Drop-down list option in the Apply to section;
(2) In the Data Validation (Drop-down List) Range box, please specify the range you have set data validation (drop-down list) for;
(3) All items of the drop-down list are listing in the List Items section, and please select one item you will highlight cells based on;
(4) In the Select Color section, please choose one color you will highlight cells with;
(5) Repeat above (3)-(4) steps to specify other items and highlight colors.  

Tip: If the specified data validation (drop-down list) range contains cells that you have not set drop-down list for, the items of the drop-down list will not list in the List Items box. And you need to specify the range again.

5. Click the Ok button.

Now when you change the items from the drop-down list in the specified data validation (drop-down list) range, the cells will be highlighted or unhighlighted automatically based on the chosen drop-down list items.

The Colored Drop-down List feature also can highlight rows based on specified drop-down list items in Excel easily. Please do as follows:

1. Click Kutools > Drop-down List > Colored Drop-down List to open the Colored Drop-down list dialog.

2. Now a dialog comes out and asks whether the data range contains drop-down list.
A. If your data range doesn't contain drop-down list, please click the Yes, please help me to create option;
B. If your data range contains drop-down list, please click the No, I know the Data Validation feature option, and then skip to the Step 4.

3. In the Create simple drop down list dialog, please add drop-down list as follows:
(1) In the Apply to box, please select the column you will add drop-down lists for. In my example, I select the Fruit column in the table;
(2) In the Source box, check Enter a value or referene a cell value option, then choose the data source or manually type in the values separated with comma, such as "Peach,Pear,Mango,Grape,Orange,Apple". Or check Custom Lists option, and choose the list from right pane.
(3) Click the Ok button.
 

4. In the Colored Drop-down list dialog, please configure as follows:
(1) Tick the Row of data range option in the Apply to section;
(2) In the Data Validation (Drop-down List) Range box, please specify the range you have set data validation (drop-down list) for;
(3) In the Highlight rows box, please select the rows you will highlight based on drop-down list items;
(4) Now items of the drop-down list are listing in the List Items section, please select the one you will highlight rows based on;
(5) In the Select Color section, please choose one color you will highlight rows with;
(6) Repeat above (4)-(5) steps to specify other items and highlight colors. 
 

5. Click the Ok button.

When you change items from the drop-down list in the specified data validation (drop-down list) range, the specified rows will be highlighted or unhighlighted automatically based on the chosen drop-down list items.

1. If you need to stop cells or rows from being highlighted automatically, please select the cells or rows, and then click Home > Conditional Formatting > Clear Rules > Clear Rules from Selected Cells or Clear Rules from Enter Sheet.

2. If you need to clear the data validation of drop-down lists from selections, you can apply the Clear Data Validation Restrictions feature of Kutools for Excel.

3. In the Colored Drop-down List dialog, you can click the Example button to open the example sheet. However, this operation will close the current dialog.