This feature works only on Gmail chat not on the GTalk client window. It certainly is a good feature as you don’t have to juggle between windows or tabs to watch video and chat.

All you have to do is just copy a video link and paste it in your chat window. Once the link is recognized, video thumbnail will appear in the window click on it and it will start playing the video in the window above the chat window.

This feature applies to Youtube videos only. I tried using Vimeo and Break.com’s video links but they fail to show the magic.

Here is what it looks like when you play a video in Gmail Chat