Recently got handbrake for video compression. Is it really important though?

In the past, I've uploaded videos that have just looked terrible after uploading, although the file has actually looked fine. Also, how do people get their default video quality to be higher?? Play a video of your own and it will always be at like 480p as default, but say another popular creator has his default at 1080p off the bat? Makes no sense, is it file compression before uploading?

Also, on a side note, how do you make THUMBNAILS more high quality too. Its such a weird phenomenon how you can upload the same quality image as maybe a popular youtube, and there's will just look better than yours, for no reason other than the fact that YouTube just decide to make their thumbnail look higher quality (I edit all thumbnails on photoshop with max quality, again is it compression that will fix this?)