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In this video tutorial, the presenter demonstrates how to annotate an image using an online tool called Good Annotations. Image annotations are useful for labeling and pointing out specific details in images. To access Good Annotations, search for it on Google, click on the website, go to tools, and select image tools for image annotation. Upload the image you want to annotate, such as a street view picture of London Westminster. This tool allows you to easily mark and highlight key points in the image for clearer communication.