Q: What is the difference between 8 bit and 32 bit Pixel Format in Vegas Pro Project Property Settings ?
Answer: This is a laymen's basic explanation from a non-expert.
The bits is refering to Colour Depth - the more Bits equals greater colour depth
The 32 bit setting is more for Professional Film makers using lots of Compositing Modes and Fx with High Resolution video. The type of video that would end up being shown on a TV Broadcast or a big screen at the cinema.
For a full explanation of the technical differences, please refer to this article on Wikipedia.
So for YT videos 8 bit is OK.
The problem with 32 bit for home users on a regular computer, is that it will take a huge drain on your CPU resources and create more lag in the preview window.
If you want a full technical explanation, then please go to the top toolbar in Vegas Pro
Help - Contents and Index - Index tab - search "Properties" - select "Properties" - Video
This information applies only to Sony Vegas Pro.
Project Properties Window in Vegas Pro 11
Alternatives available - for most average users 8 bit is just fine