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The video tutorial demonstrates how to remove picture backgrounds in MS Word without using any additional software. By selecting the picture, clicking on the "Format" option, and then selecting "Remove Background," users can easily remove unwanted areas by marking them with the magenta color and clicking on "Keep Changes." Additionally, by selecting the "Mark Areas to Remove" option, users can further refine the background removal process. This simple technique allows for precise and quick removal of picture backgrounds in MS Word.