I'm still not sure you're getting it. Of course if you just put your film up on YouTube and then sit back and wait for people to find it nothing will happen - it'll get lost amidst all the stuff that is posted there, stupid or not. In fact I wouldn't worry too much about getting lost amid the stupid stuff, I'd worry about getting lost among all the good stuff... but that's beside the point.
If you want people to watch your film online it doesn't matter where you host it, you have to get out there and actively work to get it in front of an audience. That may mean posting it in forums, or contacting popular blog authors and asking them to watch and post about your film, or starting your own blog to build an audience over time, or asking your facebook friends to post it to their accounts, or buying ads on youtube, facebook, google, etc, or sending press releases to your local papers, or entering them in festivals, or putting on your own screenings. Or, more likely, all of the above.
The advantage of hosting it on youtube is that if you can get enough views through the above actions then you may start to pick up more organically from the network effect of youtube's size. But you have to do the work first to get that started.
I'm not sure why you think festivals will be the best or only outlet - the reality is only a very small percentage of films submitted get into most festivals, so it's not necessarily any more likely you'll get in than blowing up on youtube. And while you'll likely be competing against a smaller pool of videos than on youtube, you'll be competing against higher average quality than youtube as well - so your film will have to be that much better to stand out. Again, it's just as easy to get lost among the good films as it is amidst all the crap on youtube.
make good films, it's the best way to get noticed.
I'd have to disagree, at least in part. I think making good films is simply the most basic starting point to getting noticed... but a good film that nobody knows about doesn't do you any more good than a bad one. If a film plays in the forest , and no one's there to see it, does it matter how good it is? You have to do the work to reach an audience; if you wait for them to come to you, you'll probably be waiting a long time.
So make good films, and do whatever you have to to put them in front of people who will take notice; it's the best way to get noticed.