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In this tutorial, the process of creating a demo markdown project is explained. The instructor demonstrates how to upload an image file into a folder by dragging and dropping it. They show how to use basic markdown syntax to add the image to the file, starting with an exclamation point followed by brackets for alt text and parentheses for the file path. The example used is adding the logo image, and the instructor highlights that using regular markdown syntax will successfully add the image to the markdown file.