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In this video, the creator demonstrates how to annotate images using the online tool "Good Annotations." Image annotations are helpful for labeling or pointing out details in images. To access Good Annotations, search for it on Google, click the first link, go to "Tools," find "Image Tools," then click on the "Image Annotation" link. Upload an image, like a street view picture of London Westminster, and annotate it using the tool. The process is straightforward and can help in effectively highlighting key details in images.