Not only does it need the latest version of the app, but in order to be eligible, you also need to run Android 10 on the TV, according to the change log. Previously, it would be restricted to streaming at 4K on Android TV even though you chose 8K content. This restriction would be eliminated by the update, which is apparently rolling out for some users now.
The update version 2.12.08 will add 8K support to YouTube app for Android TV version 10 and above, and was first confirmed by Android Police. There seem to be two variants of the change log as well. Although 8K video playback support was stated in the initial version, the updated change log changed it to “Limited 8K support for Android 10 and up,” as per the statement.
You can upgrade to version 2.12.08 of YouTube for Android TV to see if you have access to the functionality. It will however, provide minimal 8K support, as the changelog mentions. Also the update will not be immediately available to all. You can check whether you have the new version of Google Play’s YouTube app, or catch an update from APK Mirror. You can still try to make use of the update by downscaling if you don’t have an 8K Android TV.
As per the report, the initial changelog said there would be HDR support for streams with the.av1 codec, but it was replaced in the updated changelog with Cast Link support. This will incorporate Casted content with playback controls on Android TVs, such as the remote, an enhanced screen resolution selection menu, and more, giving users more control over watching YouTube content.