This quote from a Cnet article on the topic of smut and online video:
A weeklong review of some of the top user-generated video sites by CNET News.com unearthed scenes of beheadings, masturbation, bloody car accidents, bondage and sadomasochism. It's important to note that no child pornography was discovered.
Meanwhile, imagine if YouTube needed to monitor all posts. They'd have to hire hiring people to eyeball each frame of the more than 50,000 videos that get posted daily. Although most flicks are under 2-3 minutes, YouTube allows videos to last up to 10 minutes. So YouTube would be monitoring up to 2,500 hours worth of video a day.