Why is the "Thumbnail" button grayed out when adding videos to a menu?

We currently do not support updating the thumbnail prior to the button being added to the menu.

Once you have added the button to the menu, you can modify the thumbnail from the button's settings (hover over the button and click the settings icon)

Also, you can only edit the thumbnail of a button if the menu layout supports thumbnails, otherwise the thumbnail button will be grayed out.

In the future we will be adding support for updating the thumbnail while first creating the buttons and before they are added to the menu.