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I was watching http://www.youtube.com/watch?v=LIFNLDQU0VQ and the first thing I noticed was the small watermark in the upper left corner.

What (open source/free) software allows one to do that? I'd very much like to watermark my gameplay videos, since I do a lot of them.

VirtualDub > Filters > Logo seems to work very well.

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What do you use to shrink/encode them? What format are the videos in, and what would the final source be? – Breakthrough Sep 11 '09 at 22:43
    
VirtualDub, AVI container. H.264 for Video, Lame MP3 for Audio. – Grumpy ol' bear Sep 12 '09 at 11:54

Here you go, a full step-by-step guide with free software that explains you how:

VIDEOHelp: Put a custom watermark on your video

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easy, lads :) – Molly7244 Sep 11 '09 at 22:46
    
@Tom, very easy to solve: just delete you answer, ephilip was quicker. and you better be quick, before you get two more downvotes, or the next badge you earn won't be a nice one :) – Molly7244 Sep 11 '09 at 22:57
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What's this???? Somebody tried to HELP writing an answer, the phone rings, he puts the caller on hold, posts the message and two minutes later is insulted by a child hysterically pointing out HE WAS FIRST!!! and ... what? an admin? threatening him? Is this a forum to help or just show of and insult people?? TomWij, my sympathy goes with you. – Wolf Sep 11 '09 at 23:09
    
true enough, Wolf. although we don't necessarily need duplicate answers, ephilip's reaction is uncalled for. – Molly7244 Sep 11 '09 at 23:23
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Please accept Tom's answer. We both linked to the same thing, and it was only 4 minutes. I have deleted my answer, and I hope yours gets accepted. – ephilip Sep 12 '09 at 12:58

You can apparently use Windows Movie Maker to add watermarks to videos.
See this article : Watermark in Windows Movie Maker, and make sure to read the comments as well.
I haven't done this myself, so can't vouch for the process, but there are many testimonies to it on google.

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