Okay, now this is actually very easy to do. I tried adding the video through the built-in “From URL” function on WordPress, yesterday, but it just created a link (What’s the point of the feature? I mean, you could just create a link from the visual editor). Now that wasn’t something I was trying to do. I wanted to embed the video and here’s how you did it…
Although, this is a fairly easy process, I’ve added pictures for the absolute beginner. So, here we go…
How To Embed Youtube Videos Into Your WordPress Posts
First thing you need to do is select the Embed Code for the Youtube video. For this, you go to the Youtube Video URL (ex. http://www.youtube.com/watch?v=_OBlgSz8sSM) and click the Embed button bellow the video. It’ll open something like this…
1. Select the color combination of the video frame you’d like the video to have on your site. Choose something that matches your blog theme, or just leave it as the default Gray and White.
2. Choose the size of the frame. Well, the one already selected should do fine on most of the blogs. (It did on mine.)
3. Copy the embed code.
Now, in your WordPress Dashboard, within the Add New Post Interface switch to the HTML Editor.
Now paste the code, you copied, onto wherever you want it to appear in your post. Ignore the HTML tags. Just don’t post between them.
Switch to the Visual Editor and you’re all done. You’ll see a yellow rectangular box in the post. Don’t worry, it’d look fine when you publish your post.
Have fun,
Sumit. 
