It indicates that Youtube can be installed as Progressive Web App:

PWAs are like desktop shortcuts to websites that run in their own separate app window. They don’t take up much space and load faster than navigating to the website in Chrome or Edge. PWAs also get their own icons on the taskbar and won’t add to your swamp of open browser tabs.

The install button appear in Chrome since Chrome 76 if a site meets progressive web app installability criteria:

In Chrome 76 (beta mid-June 2019), we're making it easier for users to install Progressive Web Apps on the desktop by adding an install button to the address bar (omnibox). If a site meets the Progressive Web App installability criteria, Chrome will automatically show an install icon in the address bar. Clicking the button prompts the user to install the PWA.

Youtube can be installed as a Progressive Web App since end of January 2021.

Answer from Reddy Lutonadio on Stack Exchange
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YouTube
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Youtube
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Reddit
reddit.com › r/chrome › youtube is now available as a progressive web app.
r/chrome on Reddit: YouTube is now available as a Progressive Web App.
December 1, 2020 -

Until today it was possible to create a shortcut from the three dots menu, but now, when entering the YouTube site, you will see the "install" prompt in the omnibox.

Install YouTube.

Three dots menu.
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Google Chrome not responding, freezes & green video on Youtube. in Browsers and Email Source Google Chrome Summary Stopped responding and was closed Date ‎16-‎Mar-‎17 5:12 PM · How to change install location for program such as Google Chrome? in Software and Apps Hi everyone, I just joined this forum and love it thus far.
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September 23, 2015 - I was going to say look at your Default Apps and clear them - but sounds like that was done... ... Does this happen for all sites? Or maybe one in particular? A test - search for one of your favorite youtube videos in chrome - and click on the preview...where does it play? ... Click to expand... I bookmarked a YouTube link as a test and it plays it in Chrome. And then I went to YouTube.com in Chrome and played a video and it still just plays it in Chrome.
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December 30, 2021 -

Whenever I open a youtube link it just takes me to chrome rather than playing in the in app player like it used to. Been happening for a few weeks now. Can't remember if it was an app update or system update that broke it.

Edit: Well apparently after trying to figure this out for weeks, all I had to do was finally make a post, and I would figure it out myself within minutes.

To fix it, I went to my default app settings, youtube app, turned off "open supported links" then turned it back on, then opened the actual youtube app. I think simply opening the actual youtube app is what did it. Weird.

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