I think these monolithic files are provided only for up to 720p quality, mainly for compatibility with older Flash players. To download the maximum quality with youtube-dl, you have to use "-f bestvideo+bestaudio" - then, youtube-dl will download both streams, and merge them for you with an ffmpeg invocation.
yes. you can force the streamable mpg4 download with the -f option (-f22), but it seems not all videos are encoded that way. livestreamer might be the tool of choice if you don't want to use your browser to watch a youtube video.