The AWS S3 bucket is created in a specific region of the user's choice, and the IAM user account is created with access to the S3 bucket. The AWS S3 client configuration class is created to configure the connection to the S3 bucket. Custom exceptions are defined for file upload failures, such as empty files or unsupported file extensions. A service class is created that implements file upload and download methods using the AWS S3 client. An API response class is created to handle successful responses from the file upload and download methods. The controller class is created to handle HTTP requests related to file uploads and downloads. The Spring Boot application is run, and a test client such as Postman can be used to test the APIs.