youtube-dl -o - $SOME_URL > FIFO &
youtube-dl: error: using output template conflicts with using title, video ID or auto number
$ mkfifo FIFO
$ youtube-dl -f best -o - 6h9vr_xwTj4 > FIFO &
$ vlc - < FIFO
Though I assume you can also stream this at full speed by doing a `mktemp` and dumping the data into the file. In my experience, VLC handles files which are still being appended data just fine, but it'll freak out if it reaches EOF before the end of the stream. If your /tmp is tmpfs, which it is everywhere AFAIK, the only difference is that the video is being downloaded in full speed. Alternatively, if your downlink is fast (for instance, 4MiB/s) and you don't mind the slight delay, you can as well download the file wholly as mentioned in one of the ancestor comments.
It also happens that my /tmp is physically allocated.
And named pipes really and truly work differently (though there can still be buffering).
That said, no joy (though I tracked down the issue above -- configfile setting conflicting with commandline parameters, somewhat annoyingly).