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Matt and Nelson discuss hidden text and keyword stuffing in relation to Google Webmaster Tools. They explain that hidden text is content visible to search engines but not to users, such as white text on a white background or text manipulated through CSS. They note that some frameworks utilize JavaScript to reveal text upon mouse interaction. Matt emphasizes the importance of understanding these practices, as they can lead to warnings from Google about a website's compliance. Overall, the tutorial aims to clarify what constitutes hidden text and keyword stuffing, encouraging website owners to avoid these practices for better search engine optimization.