A recent Youtube Web update has added a canvas whenever the seek bar is visible, an HTML5 canvas pops up. This was not asked for and not needed. If you disable canvases for privacy, this will cause a horrific red bad to cover half the screen until you hide the seekbar. Canvases can be used for fingerprinting, which I’m sure Google is doing here.
It would be wasteful to upload the full size image only to throw most of it away. JPEG compression is very cheap, especially at low resolutions (I assume that image search uses a pretty low-resolution source image). Doing it this way is actually what I would do for best user experience. (Not saying that they aren’t doing other malicious things, but doing the resizing on the client is actually a good idea)