From Google Operating System:
YouTube has formally announced that it started to re-encode its videos in higher quality. "You may have noticed that we're now giving you the option of watching some YouTube videos in higher quality. We're making these streams available on certain videos, based upon the source file uploaded to us, and over time you'll find a greater percentage of the library is available to view in higher quality."
Two weeks ago, we learned about a trick that triggers the higher quality videos, if they're available: append &fmt=18 or &fmt=6 to a YouTube URL. Now you can choose the higher quality as a default option by going to your YouTube account settings and changing the video playback quality to "I have a fast connection. Always play higher-quality video when it's available."