Ok, so I read all your comments and took into consideration that someone said Chrome will play it. Well, here is what I found out.
1) First I tried turning on the developer menu in Safari and setting it as a chrome agent. That seemed to work, however, later, I found that I was indeed playing an HTML5 video.
2) I uninstalled Flash. I then (after restart), opened Safari and went to my YT watch later list, first video I played played fine. I went to play a Vevo video, and that requires flash. Then I went up in the list and got that message I needed flash again every time. Well, as it turns out, later, I try again and other videos played fine. ...Hulu wanted flash. ...Netflix still wanted silverlight.
3) I install Chrome browser. It will play everything, however, I found that it was using something built into chrome to play it. Netflix would play, but, not even in HD, never mind 1080p & dolby digital. So, I don't think it was playing netflix w/HTML5, but using a silverlight emulator or something.
4) Since Chrome was emulating flash, I decided to open activity monitor to see how CPU intensive it really was. Then I installed flash opened safari and played same source and see what CPU use was like (I used Hulu, because then I knew they both used Flash, and in full screen mode both times). Then I played an HTML5 youtube video. Google chrome used more CPU with their technique (before installing flash, and with flash installed, same results), than Safari with flash installed. But, the HTML5 video set to 720p at full screen, still used half the CPU that safari w/flash used. This is still ridiculous to me, that flash is still used at all.
4a) long story short, I found I could (right click) and find out if youtube video (or any video) was HTML5 or flash. So, after installing flash, I went to YT in Safari and this time it would play HTML 5 videos as HTML5 and Flash w/flash. The first time I used YT after unintstalling flash, after trying to play Vevo video, everything after that asked for Flash player, even though none of them actually need it. So, some kind of quirk there, not sure what end it was on.
(I can play netflix full 1080p & dolby digital w/my blu-ray player. But, I would still like to be able to play netflix in HTML5, 1080p/DD+ on my Mac.)
So, some videos on YouTube are not in HTML5 format, I tried several Vevo videos (on youtube) and they all seem to be Flash. But, can't we play these on iOS devices??? Something is amiss here.
• Anyway, I just wish I had more control over things. I want to be able to set Safari so that it tells the server that it wants to play HTML5 video, force that mode somehow, even if it has to tell the server it's an iOS device. (I tried to go to youtube's mobile site, but it redirects.)
• What does it take for major content providers like Hulu and Netflix to really use HTML5 and give us 1080p & DD+ on our macs?