Short answer: Use 2 to 5 words, and keep the font size at least 107 px on a 1280 × 720 thumbnail. That's what stays readable when YouTube shrinks it to 168 px in the sidebar.
Why small sizes decide everything
You design at 1280 × 720, but viewers see your thumbnail much smaller. Beside other videos it's only 168 pixels wide. Text that looks huge in your editor can turn into a few unreadable pixels there.
The generator checks this for you: every font shows your text in a real 168 px thumbnail, and warns you when it drops below about 14 px.
The numbers
- Font size: at least 107 px on a 1280 × 720 thumbnail. Bigger is safer.
- Words: 2 to 5. Every extra word makes all of them smaller.
- Lines: one or two. Two short lines are bigger than one long line.
- Weight: bold or heavier. Thin strokes vanish when shrunk.
Contrast does as much as size
A thick outline or a drop shadow separates text from a busy photo. White with a black outline works on almost anything; yellow stands out on dark or crowded backgrounds.
Keep the bottom-right corner clear
YouTube puts the video length in the bottom-right corner, on top of your thumbnail. Don't put words there.
Condensed fonts fit more
If your title has to be long, a condensed font like Anton, Bebas Neue or Oswald keeps letters tall while fitting more of them across. Filter by Condensed in the generator to compare.