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In this video tutorial, the presenter explains how to recognize and change the compatibility mode in Microsoft Word. Using MS Word 2016, he demonstrates opening an older document to identify its compatibility mode. To check the file version, he navigates to the 'File' menu, selects 'Check for Issues,' and then clicks on 'Check for Compatibility.' This action brings up a dialog box indicating the file's version, which is identified as being from Office 2003 (97-2003 format). The goal is to upgrade this older file format to the current version. The presenter concludes with the intent to show how to upgrade the document further.