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In this tutorial, Clay Preston explains how to use shading and highlighting in Word. He demonstrates how to select a color for shading by using the bucket tool, applying it to cover the entire line of text. He highlights the difference between shading and highlighting; by using the paintbrush tool, users can highlight individual words without affecting the rest of the line. He chooses yellow as his preferred color for both techniques. The video concludes with a prompt to like and subscribe if viewers found it helpful.