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In this video tutorial, the presenter demonstrates how to find and replace text in a file using the Linux terminal. The example shown involves replacing the text "Ill snooze" with "London" in a file named "Steven". The command used is "sed -i 's/snooze/London/g' Steven". This command successfully replaces all occurrences of "snooze" with "London" in the file. This method can be used to efficiently replace text in files in a Linux-based terminal.