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In this video tutorial, the presenter demonstrates how to reduce the file size of a Microsoft Word document to improve loading times, ease sharing, and optimize storage space. The initial file size shown is 11.1MB and contains text and images. To compress the document, the presenter selects a picture, goes to the Picture Format tab, and clicks on the compress pictures icon. In the compression options, they ensure the appropriate settings are selected and click on OK. The next step involves saving pictures at lower resolutions by accessing the advanced options under the file menu.