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The freeform shape tool in Microsoft Word allows you to create custom shapes and edit existing ones by adding, moving, and deleting points. To access the tool, go to the Insert tab on the ribbon and select the freeform shape tool. Start drawing your shape by left-clicking and adding points, then refine it by right-clicking the shape and selecting edit points. You can move points to alter the shape, create new points by clicking on the outline, and delete points by holding Ctrl and clicking on them. This tool gives you the flexibility to create unique shapes beyond the preset options available.