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In this YouTube tutorial, the narrator demonstrates three methods to remove highlights and background colors from pasted text in Microsoft Word. The first method involves highlighting the entire text and using the keyboard shortcut "Control + Space" to remove the highlight. This method is compatible with Microsoft Word versions 2010, 2013, and 2016. The second method requires highlighting the text, navigating to the home tab, selecting the paragraph section, and clicking on the paint can icon to ensure no color is selected. The third method is not mentioned in the provided text, as it cuts off.