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In this video tutorial, the presenter demonstrates how to compress images in Microsoft Word to reduce file size. Starting with a six-page document with several photos, the original file size is 2.8 megabytes, which could be cumbersome to email. By compressing the images, the presenter shows how to decrease the file size effectively. The process involves selecting the images, going to picture format, and choosing the compress pictures option. This allows for comparison of file sizes before and after compression, making it easier to share larger documents with images.