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In this video tutorial, viewers learn how to set up business letters in Microsoft Word. The process begins by 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 input the desired size. After applying this change, the cursor moves down to accommodate the new margin. The tutorial also mentions that the next steps will involve changing the font style, size, and spacing options, although these details are not fully explored in the provided text.