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The tutorial explains how to add pictures to a Word document using different methods. It suggests using personal images or searching the online picture library for stock photos and clip art. The example demonstrates adding a company logo to the top margin using the "Insert" tab and the "Pictures" command. However, when trying to move the image to the top margin using drag and drop, it fails due to the text wrapping setting. The tutorial emphasizes that text wrapping controls the image position and document flow around it.