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In this tutorial, Clay Preston explains how to use shading and highlighting in Word. He starts by selecting a color for shading, opting for yellow, and demonstrates how to apply it. Shading covers the entire line of text. For highlighting, he shows how to select a word and then use the paintbrush icon to apply a highlight color, which only affects the chosen word and not the entire line. He encourages viewers to experiment with different colors for both shading and highlighting. The video concludes with a request for likes and subscriptions if viewers found the content helpful.