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For all of Google's emphasis on integrating its own services across Android, playing YouTube videos outside of the official YouTube app has usually required losing some piece of the experience, whether it's backwards compatibility, mobile optimization or just keeping viewers in the same app where they started.
Users will be able to see the video in either HTML5 or Flash players, based on their web browsers and preferences.  Browsers that allow to use HTML5 videoplayer are listed on YouTube HTML5 settings page.
Another enhancement of the new embed is that it allow embeds to work on those mobile devices, which generally have their own video player instead of  HTML5 or Flash.

The YouTube API blog has just introduced a new embedding style for HTML5 which are compatible for browsers and mobile devices…. A new YouTube Android Player API will let third parties integrate a full YouTube player into their Android apps with adaptive streaming, orientation and other special tricks intact. Any Android 2.2 or later device (including Google TV boxes) can come along for the ride, and views will count towards producers getting paid.

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