Read about someone having issues with streaming YouTube videos using VLC and found out that I had the same issues. The video quality was perfect, but it would play a bit then freeze up (I assume buffering) and then play some more. Very choppy. Research online found a lot little tweaks that didn't work. But I finally found a solution that did.
The solution was to replace a file called youtube.luac with a more updated version. I found that file here. Just right-click on this link and look for; Save linked content as (Opera), Save link as (Chrome), Save link as (Firefox).
https://raw.githubusercontent.com/videolan/vlc/master/share/lua/playlist/youtube.lua
It's a text file with the name youtube.lua. Before saving put a C at the end so it reads youtube.luac. Or save it first and then rename it and add a C at the end. Now you have to go to the following path and replace the file there. Make sure VLC is closed at this point.
C:\Program Files\VideoLAN\VLC\lua\playlist
The first thing I did was to just rename the original there to youtube.luac.bac. This keeps the original just in case. You will probably get security prompts while missing with these files. I just clicked on Continue when they popped up.
When I had renamed the original I then just copied the new one, just downloaded, into this folder. And that's it.
When I then opened VLC, then Media, then Open Network Stream, and put in the web address of the YouTube video, no more choppiness. Problem solved.