What the Expand on Click Feature does is growing a embedded video before playing it when the visitor clicks on it.
For the feature to work the embedded video must be smaller then content area of your theme. And screen space needs to allow for wider videos.
Meaning there will be no effect when its already occupying the full width of your content area. This is also the ARVE default, but there is a Maximal Width Setting and the maxwidth shortcode attribute you can set to change that behavior. Aligned videos are by default limited to a maximal width of 400 pixels. The Align Maximal Width setting controls that.
If you use Blocks where is a the default content-width WordPress sets for your content that varies between themes. With the settings enabled it will give clicked videos the Full size with with the alignfull class.
The card style is nice for this feature.
In Classic Editor you can also use maxwidth to limit the initial size. Not that maxwidth setting is intentional excluded in the block editor because it would be to messy. You can wrap video in group blocks and set the the “content width” in the layout settings of the block to limit the width if you like.
Example shortcode:
[arve url="https://youtu.be/6pxRHBw-k8M" mode="lazyload" maxwidth="400" grow="true" /]