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In this tutorial, the process of inserting a watermark into a Microsoft Word document is explained. The video discusses how to use both preset watermarks and how to customize them. The example given is adding a top-secret watermark to protect a secret recipe. The steps to insert a watermark involve clicking on the design option in the top ribbon of Word and selecting the Watermark option. The tutorial emphasizes the ease of inserting a watermark with preset categories such as confidential and disclaimers.