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In this video tutorial, the creator demonstrates how to create a modified block business letter using open punctuation. Open punctuation involves omitting the colon after the salutation and the comma after the complimentary close, unlike mixed punctuation, which includes these punctuation marks. To format a modified block letter, set a tab at 3.25 inches on the ruler, which is the midpoint of a 6.5-inch typing line. The date and closing lines should also align with this midpoint. This setup can be prepared before or after typing the letter. The tutorial showcases a pre-typed letter formatted correctly with appropriate spacing.