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 ExchangeVideos
Can I remove the vidIQ extension later?
How does vidIQ work on YouTube?
What is the vidIQ extension?
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.
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.