This update will not bring an end to vertical recording, however, it will improve your experience of watching them in a slightly more pleasurable way.
The YouTube app's old behaviour was to show vertical videos in "full screen" by placing it in the center between two large black bars which made it look pretty bad. As of the latest version, you will get to watch the vertical video in true full screen as shown in the second screenshot above.
Those who still haven't received a notification to update your app can download the APK file at APKMirror.
And those still wondering why such videos are bad should watch this: