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The video tutorial explains how to create and modify drop-down lists in Microsoft Word, highlighting their usefulness for controlling user input through predefined options. Drop-down lists can be particularly effective for conducting surveys, such as asking users which office table they use most frequently. To begin creating a drop-down list, users must first enable the Developer tab in the ribbon by accessing the File menu, selecting Options, and then customizing the ribbon accordingly. The tutorial provides step-by-step guidance on formatting and managing these lists for various applications.