Late Thursday night YouTube quietly added the option to watch videos in high definition (HD) without the need for any URL hacks. On any uploaded videos that are wider than 720 pixels, users will see a new option to "watch in HD" where the "watch in high quality" option usually appears.
In addition to the quality change in the player, YouTube has updated the embed options to let users chose one of four different sizes--all the way up to 640x505 pixels. There is still no option to embed the video in HD (officially), but you can accomplish this using the method we posted a few weeks back. Also worth noting is that there's not yet an option to automatically have the HD version play, something which you could tweak in your account settings with the introduction of higher quality clips.
As TechCrunch notes, YouTube has made no mention of the HD upgrade on its blog. Expect to see something in the next few hours. In the meantime, here's a quick still comparison of what a clip looks like in normal quality compared to HD:
Here's the source clip if you want to check it out for yourself.