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In this tutorial, Clay Preston explains how to use shading and highlighting in Word. He begins by selecting a color for shading, demonstrating this by choosing yellow. When applying shading, the entire line is covered. For highlighting, he shows how to select a word and use the paintbrush tool to choose a color that only highlights the specific word rather than the entire line. He encourages viewers to experiment with different colors for both shading and highlighting. The video concludes with a call to like and subscribe.