Going to upload a bunch of useless and irrelevant videos to Youtube. Some stupid "gameplay" videos, mainly due to the music in the background. My first time ever, never uploaded anything to YT before.

Anyways, the size. They seem a bit on the big size as the main point is the music and not what is on the screen. The biggest videos are like 160 megabytes, for like 7 minutes worth of video (and music).

Is that too much to upload to Youtube? I have no idea what can be considered as a suitable size, is there some max size allowed in Youtube, does it really matter anyway... I am unsure if the video and sound are already compressed now, it is just an avi file (I don't recall if I checked the properties for the video encoder), and I am pretty happy with the quality at the moment.

60-160 megabytes still sounds quite a lot, considering some two-hour movies with pretty good quality being 700-1400 megabytes when they've been compressed properly with divx, xvid or whatever.

The main questions: Does Youtube compress them anyway (both the video and audio) when I upload them? Or should I compress them further with some program myself first (any suggestions?), or even replace the gameplay video with some static pictures in e.g. MS Movie Maker, if the music is the main point anyway? I'd rather still keep the video there, but if it allowed to reduce the size to sane levels, considering that some videos are just showing some static menu anyway.

Sorry, I don't even recall which video capture program I used, I tried one free (open source, I think) that I saw getting good feedback somewhere, and it did the work pretty good and was very easy to use, even captured the Munt audio beautifully (something that e.g. DOSBox's own video capture option doesn't apparently do). I'll see it when I get back home. So it isn't e.g. FRAPS. I'll mention it when I remember it.

The only slight problem I had with it was that as I set it to record only the window where the game runs, the video shows also the window borders (a bit like the visual bug when you play Gothic on Windows 8, or the visual bug in the intro video of, I think, Tomb Raider 2 on GOG). But I can live with that, a relatively small visual glitch in the videos.

Maximum size for Youtube is 2GB if I remember correctly Yes. Youtube uses (lib)x264 (MPEG4) and VP8 (WebM) encoder to compress them.
Static picture would help with video compression.

Get ffmpeg from here
ffmpeg -i input.avi -acodec libvorbis -aq 7 -vcodec libx264 -preset slower -tune film -crf 24 -threads 0 output.mkv
Use higher crf value if you want lower video quality and smaller size.

If you want to keep the audio as is then use "-acodec copy" to directly copy audio stream from source to output
ffmpeg -i input.avi -acodec copy -vcodec libx264 -preset slower -tune film -crf 24 -threads 0 output.mkv

I've uploaded videos bigger than 1,6 gig to youtube, and I know of peope who've uploaded bigger files than that. Only limit is the length, as Maighstir said. Until you've uploaded maybe ten or so videos at max 15 minutes length each, you'll be able to upload longer clips.

Note that Youtube's HTML5 video can be served in both WebM (VP8) and MPEG4, depending on the size and video (it defaults to WebM if available, but even web browsers that don't support the format (but do support MPEG4) can use HTML5 video. Though, yes, Flash videos are a subset of h264 (as is MPEG4, or vice versa).

I forgot about that since I only get WebM from Youtube in html5
Stupid software patents and licensing costs meaning no H.264 support in Firefox :(

Thanks all. I could mark pretty much any as a solution, but the main points that interested me (e.g. that Youtube will re-encode it anyway (so I don't really need to fret about the original size of the video), and what kind of limits there are) came already in the first reply.