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In this video tutorial, viewers learn how to set up business letters in Microsoft Word. The initial step involves changing the top margin from 1 inch to 2 inches. This is done by navigating to "Page Layout," selecting "Margins," and then "Custom Margins," where the top margin is adjusted to 2 inches. After clicking OK, the cursor position reflects this change. The tutorial also mentions that the next adjustments will include modifying the font style, size, and spacing options before making any further changes to the document.