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In this video tutorial, the presenter explains how to convert and edit indexed color images in Adobe Photoshop. They mention that certain tools, like the smudge tool, do not work with indexed color images. To overcome this limitation, the presenter demonstrates how to convert the image to an RGB color format, which allows for easier manipulation. The process is simple and can be done by selecting "Image" in the toolbar and then choosing either indexed color or RGB color. Once the image is converted, all the tools can be used without any issues. The presenter encourages viewers to ask questions, share doubts, or provide suggestions in the comment section below.