For example, let's say I released a music video and upload it to Youtube. I create a second Youtube account (perfectly within YT's TOS) and create a playlist of the following 4 videos:
My music video
Or if I had a cheeseburger recipe video, I could make a playlist containing:
Gordon Ramsey's cheeseburger recipe
My cheeseburger recipe
Wolfgang Puck's cheeseburger recipe
Rachael Ray's cheeseburger recipe
The goal is to "position" yourself with the leaders in your niche so viewers will associate you with them, giving you additional "authority", as well as to siphon some of the popularity of those videos.
This may also help your videos appear as "related" videos on popular video view pages, which can be a great source of traffic to your video view pages.
Plus, the number of times your videos are used in playlists is a likely Youtube search factor.
You can use any and all public video on Youtube to create playlists, meaning if you can view it on Youtube, you can use it. Using playlists of popular videos and famous people is another way to market your videos on Youtube.