Yes, it’s mostly just the ads. There are some nice-to-haves like video downloads and background audio on the iOS app. I almost never use search, recommendations, or shorts, but I’m sure you’re right to criticize those features.
Can you download the videos to mp4 or is it some proprietary DRM thing that only plays on YouTube? If not that just sounds like a worse version of yt-dlp
Definitely the latter. On the iOS app you choose videos to download, and I believe they only work for 30 days without Internet access. I use yt-dlp for videos I want to archive, but I use the YouTube app downloads for one-off stuff like loading up my iPad before a flight.
I've stopped recommending this (except for in-person to friends) because it's so valuable, and I'm seriously worried about it getting stomped by YouTube.