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In this video tutorial, viewers learn to set up business letters using Microsoft Word. The first step involves adjusting the top margin from 1 inch to 2 inches. This is done by navigating to the "Page Layout" tab, selecting "Margins," and choosing "Custom Margins" to manually set the top margin. After entering "2" for the top margin and pressing "OK," the cursor moves down, indicating the change has been applied. The tutorial emphasizes the importance of making further adjustments to font style, size, and spacing options before proceeding with typing the letter.