I’ve heard the term “Recess Silicone” lately, but I don’t know what that is. What is it?
Its when you make a groove in the walls of a yoyo (like an O-Ring groove) and put silicone in it. 
Also to add to Samad, the silicone placed in is recessed which means that it is lower than the wall of the yoyo to reduce friction.
Now for my 2 cents. I do them. lol
How can I recess Silicone a yoyo?
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Goop flowable silicone into response grooves.
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Scrape excess away with a spoon.
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Go around again with spoon tip pointing down into the groove.
This should remove a little more of the silicone. When it dries, you’ll notice it’s sitting below the top lip of the response groove. This is recessed silicone.
So, this whole procedure is done without removing the response system right?
Make sure you take out whatever is in there first, ie pads, rings, etc. make sure you’re putting the silicone into an empty “recess”, literally. 
What everyone said is correct, but just to make it a bit more clear: The reason it’s called silicone ‘recess’ is because the silicone is ‘recessed’ in the response groove. Basically, this just means that the silicone doesn’t fill the groove all the way to the top. This is beneficial because there will be less friction when the yo-yo rubs the sides, but the string can still ‘snag’ on the response when you give it the ‘command’ to return to your hand.
wait, so what exactly does recessed do, and how does it help?
This is probably the least helpful thread I’ve ever seen 
What everyone is trying to tell you is pretty much what’s happening in the linked video. A groove is cut into the yoyo and filled with silicone. The silicone acts as the yoyo’s response in place of pads (like Duncan’s response pads).
Yes, and he does them very well! I speak from recent experiences!
Super necro in this ish though. :]
For some reason I get nicer binds when the silicone I put is recessed [also given that I have good string]. But I just hate how it doesn’t last long for me =[