Brian Lam provides us with a short video walkthrough of YouTube running on Apple TV. Video after the break.
Once you log in with a YouTube account, you can rate videos and add them to your favorite list. That favorite list is synced with your account online. (So you can access it from your Mac/PC.) Not many movies are available (around 10,000 will be ready by the 29th, for iPhone) but by fall, everything will be encoded for AppleTV and the iPhone