Playing, pausing, seeking to positions, and looping a <video> to your heart's content. None of which you can do reasonably well on iOS.

Probably the way youtube videos are interactive, you click to close the ads.

I'm betting he's probably talking about features like having a queue, embed code popups, tweet from within the video and things like that. Such features are considered "basic" in any decent interactive flash based player.

For your YouTube example, don't look at the player while the video is playing... look at the interface between videos. That's an interactive video player.