GOS Blog has reported that Google has made major updates to the HTML5 player offered on YouTube as an option.
The new player provides most of the features offered by the default Adobe Flash player. You get similar options in the context menu on the videos though the user experience is not as smooth.
Mozilla Firefox and Google Chrome would soon start supporting full screen playback. It is already available in the nightly/dev builds!
It is not clear however if Google would turn on HTML5 by default for people who have compatible web browsers in the future.