I would say. "umm, its a website where people upload videos of themselves and other people to share" and if they dident understand i would tie them up and pour gasoline over their computer and set it on fire because if they dont know what youtube is, they dont deserve a computer. :D
I would then upload the video i took of me burning the computer to youtube and send them a letter with the link and $2 for the local internet cafe.
I would say this: "YouTube is a video sharing website where users can upload, view and share video clips. YouTube was created in February 2005 by three former PayPal employees. The San Bruno-based service uses Adobe Flash Video technology to display a wide variety of user-generated video content, including movie clips, TV clips and music videos, as well as amateur content such as videoblogging and short original videos. In October 2006, Google Inc. announced that it had reached a deal to acquire the company for US$1.65 billion in Google stock. The deal closed on November 13, 2006."
I would stare at them.
I'd stare because even my grandparents know what Youtube is.
Then I'd casually bring them to the nearest computer and show them what they were missing.