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The video tutorial discusses the limitations and techniques for applying paragraph rules and shading in text formatting. It emphasizes that paragraph-level features cannot be applied to selected text within a paragraph. To create a highlight effect, the tutorial suggests using character-level formatting instead. For example, to highlight specific words like "ham," "turkey," and "pastrami," you should select these words, including the spaces, and access the underline options from the character panel. By enabling preview mode, you can turn on underlining, change the underline color to magenta, and adjust its weight, resulting in a visually appealing highlight effect.
