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In this tutorial, C Plus Hacker demonstrates how to create, edit, and view Markdown files within Visual Studio Code without any additional extensions. He starts by saving a blank document as a file named readme.md, noting that md is the file extension for Markdown. The readme file is indicated by an icon with an "i." When adding another file within the same project, a different icon, a little arrow, is used. This distinction helps differentiate the readme file from other Markdown files within the project.