Not all source videos uploaded will be high quality/definition (cell phone video etc), but it appears that when a high quality video is uploaded to YouTube several conversions are now being made. This allows users with fast internet connections to watch the high quality version.

Sites, such as Putfile, that have had high quality video streaming functionality (example) for over a year have now lost an edge over YouTube which previously swayed some users to register on their site rather than YouTube.

With YouTube providing free high quality video streaming, revenue sharing, groups, and various other features; the days of UGC video sites popping up quickly or established non-niche sites even surviving are surely numbered.