Either way, Flash 10 should be out next year and should bring some much improved playback.

I think those reviews/opinions are skewed. The same features are not being compared between the N900 and other devices.

I don't own an N900.
From all the reviews I've seen youtube videos played from the youtube.com website itself are NOT perfect. They are a little choppy.
The only difference between this and the G1 is the G1 doesn't play the embedded videos at all. What you are seeing is the G1 opening the videos in it's youtube client.

I can get perfect quality youtube videos on my old N800 right now when using youtube clients such as mTube, and @scene by Digia. I assure you the video is perfectly smooth. If I try playing the same youtube videos from the youtube website, my N800 plays them but they are extremely choppy, some more watchable than others, but still not something I like to watch.

I'm sure such clients will be available for the N900 (if they're not already.) The nice thing about the G1 that the N8X0 doesn't do, is that it asks you to open the video from the webrowser into the youtube client. I like that feature. Hopefully the N900 will allow that as well.

So to summarize,

-The N900 appears to be much more capable than most other devices in the sense that it can directly play embedded videos while others cannot at all. btw I also hope that with Flash 10 they will look better when embedded but no idea really.

-It appears from other video playback reviews that the N900 is a great device for playing back higher quality videos as well, and that it beats the pants off of most of the competition.

hope this helps

BTW: hopefully someone with more technical knowledge can shed more light on this issue. What are the youtube clients doing exactly? are they playing/requesting a different video format from youtube? Why is it easier for these devices to play those videos through the clients as opposed to the embedded ones?

watched full series of tv shows I normally watch on big screen, i was most impressed of the quality

(normal ~350mb episodes, no transcoding, fast action)

All right so discussing it further with some more "expert" users on IRC channel #maemo, I've learned the following.

The youtube files played in one of the clients on N8X0, are being handled by mplayer. I guess mplayer is better at this task, since it "doesn't have to run a UI written in an interpreted language rendering vector graphics"

Lcuk, I know you're in the UK: please can you confirm that that n900 doesn't (yet) like the bbc iplayer? I understand the hope is that flash 10 will improve that.

what i understood is that :

video flash plays but not correct framerate because flash 9.4 not accelerated : acceleration will com hopefully with 10.1.

the question must be : when will 10.1 be avaiable for N900*?

Which is also horribly implemented and slow even on Core 2 Duo computers...

Another thing that concerns me, is being able to play flash in fullscreen.

In all the videos I saw, i haven't seen anyone trying the fullscreen mode of flash, and are always watiching the videos slightly croped or uncentered.

Does anyone know if it possible to watch flash video in fullscreen ?

especially on Mac OS X Core 2 Duo computers.

The soccer video Bratag mentioned plays fullscreen flash. It works in the fennec browser.
So the answer is yes.