An extension called Improve YouTube (also known as ImprovedTube) is the best
I've found so far, to optimize Youtube to your preference. Unfortunately, at
this date it is only available for Google Chrome but hopefully the
developer(s) will soon make it for Firefox as well in the future.
Read also : Disable 60fps on youtube videos
Read also : Watch Multiple Youtube Videos at Once
This extension has many functions, my favorite ones are
Playback Quality, Player Size, Volume and Adblock.
Playback Quality, Volume and Adblock are self explanatory. Adjusting Player
Size to me is the most important as the default size on Youtube is 480p. This
is a problem if you play videos at 360p or lower quality on the default player
size causing the video to look blurry. With this extension, you can adjust the
player size to match video quality thus making the video to look sharp and
crisp.
There are other interesting settings that you may try yourself.