YouTube has added two new features to its videos: Theater View and Lights Off. These two features are available only for selected videos.
The “
Theater View” option lets the user watch video in an enlarged format within the browser window. This theater view helps center the video on the page and gives a theater-like presentation. There is also a “lights off” option, so when you click a button it blackens the rest of the page to make the viewing experience more theater-like.
When you hit the two buttons shown at the top left of the screen, it brings back the video to the original format.
These two options are not available for all videos, but hopefully YouTube will roll them out across the whole site in the future. For now, it appears they are available only for videos posted by universities.

Cgullworld.blogspot.com YouTube video in 'Theater View' mode
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An important note: You cannot see these two options for videos embedded at non-YouTube sites, so you can only watch video with these features on YouTube's site.
Here are three good videos in which you can turn on Theater View:
Steve Job’s Graduation Speech at Stanford University,
Barack Obama’s Speech at Google and
Randall Munroe’s Speech at Google.
YouTube also offers
annotations and closed captioning features in selected videos.