The main thing, IMHO, was the way it used flash/flv for video presentation and had a way to let users upload fairly arbitrary video formats and convert to flv on the back-end. I don't remember if I encountered flv video independently before I encountered youtube, but it was around the same time.
Remember the days before flash video? Remember having to use quicktime and realplayer? Those days sucked.
I'm pretty confident that before YouTube, the average non-geek did not have a way to embed videos on their personal websites. YouTube solved a simple but not easy problem: how can you let the mainstream share videos and search for videos. The server-side FLV encoding from what I've read - was groundbreaking - most previous video sharing websites either required a specific format/codec that required anyone who wanted to view it to install the codec and/or viewer.
YouTube democratized online video. The founders may have been at the right place at the right time with the right execution. However, do not discount the fact that YouTube's founders came from PayPal. I'll try to find the link later but in an interview one of the YouTube founders said being on the ground-floor at Paypal and watching them build the runway for the company to take-off inspired them because it made them believe it was possible.
