Well, this doesn't encode to 720p if my video is rendered in 1080p ( FHD ). This doesn't encode anything! If you encoded your Video to 720p uncompressed AVI, this wouldn't work too, because the file would be too big to strem. This only works if the original file uploaded is already encoded in a similar codec dtube is using. Otherwise loading would take forever, or browsers can't play the videos because of codec errors.
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Exactly, that is what I mentioned in the video. You should encode the video to 720p before uploading and I didn't say that it will be encoded at any point in the video.