I love this behavior actually. Besides the fact that Flash has had years to get fullscreen right, I've yet to have it worked 100% as expected and I might as well light myself on fire as try to use it in Linux.
(With HTML5 <video>) I can easily get the video to go fullscreen in the window (as is the behavior of "fullscreening" video in Chrome) which is nice because I can have a video play and not have to have my browser window at the normal size... and if I want, I can press F11 and have it go full screen (without borking my computer in the process). (Who cares what the button is... is the clipboard going to fail because it's Cmd+C in OS X and Ctrl+C in Windows?)
User agents may allow users to view the video content in manners more suitable to the user (e.g. full-screen or in an independent resizable window). As for the other user interface features, controls to enable this should not interfere with the page's normal rendering unless the user agent is exposing a user interface. In such an independent context, however, user agents may make full user interfaces visible, with, e.g., play, pause, seeking, and volume controls, even if the controls attribute is absent.
User agents may allow video playback to affect system features that could interfere with the user's experience; for example, user agents could disable screensavers while video playback is in progress.
So basically, it's up to the user-agent. If you want it right now in Firefox, just right-click on the video and click "Full screen".
(With HTML5 <video>) I can easily get the video to go fullscreen in the window (as is the behavior of "fullscreening" video in Chrome) which is nice because I can have a video play and not have to have my browser window at the normal size... and if I want, I can press F11 and have it go full screen (without borking my computer in the process). (Who cares what the button is... is the clipboard going to fail because it's Cmd+C in OS X and Ctrl+C in Windows?)
edit: I can't reply any further, but this provides context for why this decision was made. When considering mobile devices, this seems like an even more prudent choice: http://stackoverflow.com/questions/1055214/is-there-a-way-to...