Insert Youtube video using the “Add Video” button

There exists an “Add Video” Button next to the “Add image” button on the top of the post editor box in the new-post page. Though I can add images using the “add image” button, why can’t I add videos from youtube using the “Add Video” button? The only way I can add videos is to go to the HTML mode and paste the embedding html code. Does that button not work at all??? All it does is paste a link in the post!!! What a waste! [ It worked on when I was on wordpress.com]

What’s the use of that button then?