Well, if youtube clips uploaded at 1080p couldn't be watched at 1080p, people would complain. When services advertise "hd video" and it doesn't actually work in HD... I'm sure you can figure it out. But then maybe you can't, given your remark.
The most attractive feature of netflix is that it is everywhere and most people would not have a problem installing a dedicated app, just look and android and ios.
Netflix already has their own Windows desktop app. Because it can use Microsoft's unsandboxed PlayReady DRM, it can play 1080p video while Chrome and Firefox can only play 720p.