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In this video tutorial, the presenter demonstrates how to annotate an image using the online tool called Good Annotations. Image annotations can be used to label and point out key information in images effectively. To begin, search for Good Annotations on Google and click on the first link. Access the image tools section to find the image annotation tool. Upload an image, such as a street view picture of London Westminster, and start annotating to highlight important details. The process will help you effectively convey information through images.