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In this video tutorial, viewers learn how to set up business letters in Microsoft Word. The first step is adjusting the top margin from 1 inch to 2 inches by going to the Page Layout menu, selecting Margins, and choosing Custom Margins to input 2 inches. After making this change, the cursor will adjust accordingly. The tutorial also mentions that further modifications will be made to font style, size, and spacing options, although those details are not fully covered in the provided text.