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In this video tutorial, viewers learn how to properly set up business letters in 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, selecting margins, and choosing custom margins to set the top margin to 2 inches. After applying the change, the cursor adjusts accordingly. The tutorial then indicates that the next step is to modify the font style, size, and spacing options, though specifics on these adjustments are yet to be detailed.