YouTube has been supporting HD videos for over a year now. Today, the maximum output of YouTube videos is limited to 720p. The video-sharing site explains the upgrade on its blog, "As resolution of consumer cameras increases, we want to make sure YouTube is the best home on the web to showcase your content. For viewers with big monitors and a fast computer, try switching to 1080p to get the most out of the fullscreen experience."
Videos uploaded from regular users will still be limited to 10 minutes, although the maximum file size will likely receive a boost from 2GB. If you've already uploaded a video at 1080p, you won't have to re-upload since those videos will automatically be re-encoded to play back at the higher resolution.
Since even the 720p HD mode can tax some of the regular PCs out there, support for 1080p targets users with big monitors and a fast computer. If your PC can't handle the new 1080p clips, you'll be glad to know the 720p HD mode will still be available as an alternative.
Here's a comparison for how 1080p will compare in size to 720p:
HD - 720p
HD - 1080p