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In this tutorial, Sean from Tracker Software explains the importance of adding watermarks to documents to protect them from unauthorized use and indicate ownership. Watermarks can be in text or image format and serve various purposes like discouraging counterfeiting. To add watermarks using PDF Exchange Editor, simply go to the organize tab, click on the watermarks drop-down menu, and select add. You can choose to add either an image file or custom text as the watermark, customize the font, alignment, and use macros for more options.