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In this tutorial, Chatter from Code Workshop demonstrates how to create an ICO file using a simple method. The video covers the process of converting an image to an ICO file, emphasizing that you can also save directly as an ICO file. The steps involve opening the image, saving it as a 24-bit bitmap, and adding ".ICO" at the end of the file name. The original file will be retained, and it is important to note that the term "convert" may not be used correctly.