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The tutorial demonstrates how to reduce the file size of a 26 megabyte file by compressing images. This can be done by selecting a picture, clicking compress pictures, and choosing the desired compression option. Cropping areas of pictures and compressing selected or all pictures are also options. Alternatively, the file can be compressed by clicking file compress pictures, which automatically compresses all pictures in the file. After making the changes, the file size will decrease, even though it still shows 26 megabytes until saved.