"When using YouTube on your computer, the size of your video player will automatically adapt based on the available space in your browser window. If your browser is larger than a certain size, you will see a larger player by default. If you want to manually change the size of your video player, resize your browser window," explains YouTube.
When you resize your browser's window, YouTube automatically switches from 360p to 480p, 720p and 1080p, while the player gets bigger. Thanks to the adaptive DASH player, the transition is smooth.
Another change is that the "large player" setting is now called "theater mode" and has a black background.
Here's a video that shows the new features:
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