In a nutshell, your DV camcorder is taking 25 different frames per second, composed of 4 scan lines (odd and even) at slightly different times (50 images total). This is called interlace. When you try to combine 2 different times into 1 time (progressive/sequential scanning, the method your computer monitor uses) you get interlace problems.
To slightly correct the folks above, the distortion you are seeing is due to combing. If it were deinterlaced properly, there would be none of that horizontal combing whenever there was motion. So the combing is not a result of deinterlacing, it's a result of of some poorly done conversion without deinterlacing properly.
The problem you see in this video is probably because it was shot in PAL DV, then resized without any kind of deinterlacing done, like so:
also he apparently just copied this from a VOB file, which is the raw MPEG1 file that's burned to a DVD. Does Youtube even allow that format? Who can say.
Youtube can deal with a lot different stuff now and will reformat it as it transcodes it into flash, so any problems with the video encoding itself is all his fault.