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Google serves ads and videos from the same servers. Adblock can't use DNS to drop the ads without dropping videos too. Ublock in firefox sees the actual content in my browser and can distinguish youtube videos from ads.
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Google doesnt turn on MV3 and have it break ads day one that would highlight a negative change for users. Google wants people to move to MV3 and notice no difference and then they can start chipping away later.
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It's cute that you think they have level of sophistication in their strategy.
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It doesnt require sophistication. Just implement MV3 and then when the conversation about adblockers comes up make a note that its probably not wise to cut it as extensions have switched to MV3 and its a controversial topic. Its easy to see how different teams would come to this without collaborating, its the MV3 team doing what they do and the ad block team reading the room.
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Does it block ads in youtube videos?
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Yes.
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The MV3 API isn't enough to block YouTube ads on their own, but Safari ad blockers which also include web extension API blocking can see enough traffic to block YT ads. 1Blocker does this, and even StopTheMadness Pro's blocking have enough flexibility to do it.
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I personally notice a lot of difference between AdGuard and UBO.

AdGuard just blocks much less.

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