I'm quite sure the issue isn't with mouse or keyboard, the problem only occurs on firefox, I have tested it on chrome, nothing like this happens. When I press on that youtube logo, the highlight happens but the input still goes through so I am sent to youtube home page.

That's probably related to the accessibility feature. It helps for people with disabilities - like when they cannot use a mouse, but can use a keyboard, pressing tab repeatedly will cycle through all the 'clickable' elements on the page.

Typically for accessiblity enabled pages, there will be a way to indicate which element is active so when the user presses the spacebar or enter button, they know that that element will be clicked on

Similar experience is available on most of the windows applications too. when u press tab, the cursor cycles through different elements within the application, when the appropriate element is highlighted you can take several actions eg., pressing spacebar is equivalent to clicking, or there's also a button on the keyboard for right-click and so on.

some websites provide the ability to cycle through the elements and some don't. Youtube is one such site that offers this.

If you are annoyed that the blue border is there, you can click any empty on the webpage with your mouse. I tend to do that too :)