The simple thing it did was to allow users to embed.
By doing so, YouTube videos could now run any video on any website. This simple hack resulted in rapid growth as thousands of websites and blogs started to embed YouTube videos.
What YouTube did was a sort of symbiosis. The people coming in from the websites would view the videos on YouTube, and the videos helped the sites get the traffic they desired.
The videos became sharable with just one easy click. The net result was the videos added value to the content of sites and thereby uplifted YouTube, too.