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When you save passwords in your web browser, they are stored in an encrypted password vault on your computer. However, these passwords can easily be retrieved and decrypted by anyone with access to your file system. In this video tutorial, the process of recovering, revealing, and decrypting saved passwords is demonstrated, focusing specifically on Google Chrome. The tutorial involves creating a test account and showcasing how passwords can be easily accessed. The importance of being aware of potential security threats is reiterated throughout the video.