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In this video tutorial, viewers learn how to set up business letters in Microsoft Word. The process begins by adjusting the top margin from 1 inch to 2 inches. To do this, users navigate to the "Page Layout" tab, click on "Margins," and then select "Custom Margins." They enter "2" for the top margin before pressing OK. After changing the margin, users are advised to modify the font style, size, and spacing options to ensure the letter is properly formatted. The tutorial emphasizes making these adjustments before starting to type the letter.