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In this video tutorial, viewers learn how to set up business letters in Microsoft Word. The tutorial begins with adjusting the top margin from 1 inch to 2 inches. To do this, users navigate to the page layout, click on margins, and select custom margins to input the new measurement. After confirming the change, the cursor automatically adjusts to reflect the new top margin. The next step involves modifying font style, size, and spacing options before proceeding further with the letter formatting.