Copyright Vs Let's Play Videos

The most subscribed YouTuber is PewDiePie, a gamer. He usually posts Let's Play videos over a plethora of genres. Now, the question is, where does Copyright end and derivative work begins? I am not yet that familiar with the Copyright laws. How can the Let's Play channels get ad revenue from posting a video...only with added commentary? I am not bashing Let's Play channels, but where will we draw the line?

I know that indie game developers will benefit greatly from the free exposure that they allow LP channels to show their games. It is still muddy ground for me. Any one care to help me on this? I plan to set-up a channel soon, and getting the plans up. Just do not want to get a strike.