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In this video, the tutorial demonstrates how to reduce the file size of a Microsoft Word document for faster loading times, easier sharing, and more storage space. The Word file shown is around 11.1 MB, containing text and images. The process involves selecting a picture, going to the Picture Format tab, compressing pictures, and saving them at lower resolutions. This can be done by clicking on the compress pictures icon, unchecking "apply only to this picture," checking "delete cropped areas," selecting "use default resolution," and saving at a lower resolution in the options menu.