Go to the View menu and you will see an option for "Full Screen". Choosing Full Screen will fill the screen with video, but the quality may not be as good as it was in the smaller version.
Press the "Esc" key to return to iTunes.
If you always want to play video in Full Screen, go to iTunes / Preferences... on the Menu Bar and choose the Playback panel. Choose "Play Movies and TV Shows full screen" and "Play Music Videos full screen".