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WhatsApp still compresses the video but you get a much better quality than the standard one.
Similar to sending HD photos, this feature too adds a 'HD' button in the drawing editor of the app, according to WABetaInfo. So before you hit the send button, you'll see a new HD button on top of the box. When you tap on this, you'll see two video quality options where one is Standard quality and the other is HD (High Definition) quality.
Standard quality is the default setting for videos where WhatsApp compresses it from the original quality. HD lets you send videos in a higher quality albeit slightly compressed, so while you don't get the original quality, you'll still get a much better video quality. An example here is the Standard quality is 416 x 880 pixels and 6.3MB in size, the HD quality will be 608 x 1296 pixels and 12MB in size.
This makes sense too since WhatsApp relies on quick messaging so sending large files would take longer, and consume more data and space. By default, the video quality will be SD so you'll have to manually choose the HD option whenever you send a video on WhatsApp. This feature works the same way as sending HD photos where you have to choose the HD option.
The new feature is available with the latest WhatsApp beta for Android 2.23.14.10 update. If you're on the WhatsApp beta programme, you can update it to the latest version and look out for this feature.