Change:
udp" uses the Capsule Protocol as defined in HTTP-DGRAM. Clients issue requests containing a "connect-udp" upgrade token to <del> initiate a UDP tunnel associated with a single HTTP stream.  The target of the tunnel is indicated by the client to the proxy via the "target_host" and "target_port" variables of the URI Template (see client-config).  If the request is successful, the proxy commits to converting received HTTP Datagrams into UDP packets and vice versa until the tunnel is closed.  Tunnels are commonly used to create an end-to-end virtual connection, which can then be secured using QUIC QUIC or another protocol running over UDP. </del> <ins> initiate a UDP tunnel associated with a single HTTP stream.  Tunnels are commonly used to create an end-to-end virtual connection, which can then be secured using QUIC QUIC or another protocol running over UDP.  The target of the tunnel is indicated by the client to the proxy via the "target_host" and "target_port" variables of the URI Template (see client-config).  If the request is successful, the proxy commits to converting received HTTP Datagrams into UDP packets and vice versa until the tunnel is closed. </ins> When sending its UDP proxying request, the client SHALL perform URI Template expansion to determine the path and query of its request.

Discussion:
Yes that's much better. Thx
section 3 (http exchanges) has the following sentence and I don't understand the intention of this sentence: Tunnels are commonly used to create an end-to-end virtual connection, which can then be secured using [QUIC] or another protocol running over UDP. Is the intention of this sentence only to provide a definition of "tunnel"? In this case it should maybe be move into section 1.1? Or is there something else this sentence should tell me and I didn't get?
It's basically the equivalent to how HTTP/2 describes the CONNECT method URL
also uses the term "tunnel" to describe CONNECT.
Section 3 already describes in detail what it means by a UDP tunnel, can you clarify what's unclear?
The sentence just seems a bit out of context in this paragraph (maybe check the whole paragraph). If the intent is to just define the term tunnel, I think it would be more useful to move this sentence to section 1.1. If this sentence is trying to tell me more than defining what a UDP tunnel is, then I don't understand the sentence. So what is this sentence supposed to tell me?
The purpose of the text here is to inform implementations what the purpose of the HTTP exchange is (the tunnel is the purpose). That's important for HTTP implementers to understand why they would add support for it. E.g. If a server does not want to support that purpose, then it should reject it.
I totally didn't get that from this sentence. And I think it's still a bit misplaced. Maybe this should be a new paragraph...?
I'm not sure I see what's wrong here. Do you have a suggestion?
The single paragraph seems fine to me and in-keeping with the style that other HTTP documents use to speak about similar concepts. The only change I might suggest is to move the sentence "Tunnels are commonly used to create an end-to-end virtual connection, which can then be secured using [QUIC] or another protocol running over UDP." to immediately after the first sentence of the paragraph.
Thanks NAME I like that - wrote it up as