First you need to copy the embedded code of the video you want to insert in your Power Point presentation, You can use embedded codes not only from YouTube but many other Video streaming sites as well.
Insert Videos in Powerpoint
Now when you have copied the embed code you can go to the slide in Power Point where you want the video to show. Then go to Videos from Website under Video which you will find in Insert tab. (See the image below).
The paste the copied code into the box which pops up after clicking Video from Web Site. Click Insert.
Now the video box appears, you can resize the box by dragging the corners of the Box and also move the box with Mouse to place it at the right position.
You will require a Internet connection to play with video, if you plan to play with PPT offline, you can download the YouTube video and insert it as a local video. This will let you play it even without the internet connection.