Here is more from the YouTube blog:
With the swipe of a finger, you can watch a video at the bottom of your screen while you keep exploring. Think about it this way — you can watch a video about making the perfect fried chicken while searching for homemade salted caramel sauce recipes. You can always go back to full screen with a swipe up so you never lose your place, or swipe right or left to dismiss the video. Just try to not drop your phone in the sauce.
The app update also lets users watch playlists of videos continuously without having to press play on every single video. Once you hit play, the playlist will continue to roll. The app update also includes a new preview feature for Cast, which is when you are playing YouTube videos from your phone to other devices.