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In this tutorial, Clay Preston explains how to use shading and highlighting in Word. He begins by selecting a color to shade text, opting for yellow. To shade, he demonstrates using the bucket tool, which colors the entire line. For highlighting specific words, he suggests selecting the text and using the paintbrush tool, allowing only the chosen words to be highlighted, without affecting the entire line. He encourages viewers to choose any color they prefer. Clay concludes by inviting viewers to like the video and subscribe if they found it helpful.