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In this tutorial, Clay Preston explains how to use shading and highlighting in Word. He begins by selecting a color, specifically yellow, for shading. To shade a word, he demonstrates using the bucket tool, which colors the entire line. For highlighting, he shows how to select a word and then use the paintbrush tool instead, which only highlights the specific word without affecting the rest of the line. He encourages viewers to choose any color they like for both shading and highlighting. The tutorial concludes with a request for viewers to like and subscribe if they found it helpful.