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In this video tutorial, the presenter demonstrates how to compress images in Microsoft Word to reduce file size. The example document contains standard text and several photos, with a total size of 2.8 megabytes. Compressing images can help reduce the file size for easier emailing. The process involves selecting an image, going to the picture format tab, and selecting "compress pictures" to adjust the image quality and reduce file size. This can be especially useful for larger documents with multiple images.