Example: (I found out about this when trying to embed Gary Moore video, so sorry about his death, great musician).
The good thing about the new code, is that your viewers will be able to view your embedded video in either Flash or HTML5 player, depending on their viewing environment and preferences. This is especially good for iPhone and iPad users, who don't have Flash.
An additional benefit of the new embed style is that it will eventually allow embeds to work on mobile devices, which typically use a built-in player instead of Flash or HTML5.
By the way, most modern browsers support HTML5, but in order for you to be able to playback YouTube in HTML5 you might want to join YouTube's HTML5 tiral.