I would expect that the Video story posts would have a thumbnail shown in the post, like the image stories, but it looks like it just has a placeholder image. I created the story by uploading 1 video and publishing it without any changes. See attached image.

This was tested on WordPress for Android version 16.5-RC-1, Pixel 3 phone, Android version 11.
Thank you for the report @pollyplummer!
I tested the steps you provided and found that the thumbnail works for me if I view it in a browser but the video thumbnail does not work if I view the post in a Preview or a Webview (via View Site), as mentioned on the original report. 👍
Steps to reproduce:
Also:
Result: video thumbnails for story and blog posts do not show up in Previews or Webviews.
Story post:
View Site > Webview for a Story Post|Firefox|Chrome
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Tested with WPAndroid 16.5-rc-2 on Pixel 3 Android 11.
Blog post with a video block:
View Site > Webview for a Blog Post|Firefox|Chrome
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Tested with WPAndroid 16.5-rc-2 on Pixel 3 Android 11.
@planarvoid is it too late to include this in the Media Picker Consolidation project by chance? I know it's a stretch… 🤔 but thought I would ask just in case!
Decided to add this to the list of issues to consider for Groundskeeping (our maintenance rotations) starting Feb 8 and targeting v16.8.
@designsimply the media picker consolidation project's current phase is done and this is something not related to it anyway (it's not in the media picker). I'd probably consider it as part of the Stories project? It's either stories or gutenberg but I guess Groundskeeping is fine 👍
Thanks! This may also be a duplicate of https://github.com/wordpress-mobile/WordPress-Android/issues/13589. After seeing that issue, I think this one may be more appropriate for Groundskeeping and I'll try to circle back to check on it in our next few rotations.
This should be a little bit improved once this PR lands in WP.com and Jetpack: https://github.com/Automattic/jetpack/pull/19176. (I was fixing a separate, video loading indicator issue for the block and realized it may have an effect on this issue.)
Only for stories, and only when VideoPress is enabled, the preview should show correctly in the in-app preview (once the PR has landed). This was done by setting the poster element of the video tag in the story (which is available if VideoPress is enabled).
In other cases I'm not sure what could be done since it seems like the WebView doesn't preload videos by default, and we don't have a poster available for non-VideoPress videos. Perhaps there's a setting we can choose to tweak in the in-app WebView for this. Then improving the preview in Gutenberg would be a separate issue, I don't have any insight into that one.