Well, you have to press record (the red circle, dummy!) and THEN select the region of the screen...THEN you press "play" on the youtube (or other video player) window. You'll have a few seconds of lag time on the beginning of the video.
On my desktop computer at work, I actually have to record the audio from a microphone and make sure that everyone around me is superduper quiet. Alternatively, you can narrate parts of the video...like if you're explaining how to download or use CamStudio you can show full-screen recording while you narrate the steps. Very useful for creating training videos or how-to's for your students.
