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The tutorial demonstrates how to create banners using thumbnails with the free software GIMP. The host suggests using these banners on bonus pages or websites. To begin, users should download GIMP from its official site (gimp.org). Once installed, the first step is to open the software and select "File" then "New" to create a new image. The recommended banner size to set is 300x250 pixels. The host encourages viewers to look up common banner sizes online for reference, such as 350x250 and 250x250 pixels, as they are popular dimensions for banners.