An established company like YouTube/Google must have some say in the music posted. I feel like sometimes someone posts something rogue and it gets taken down quick, but most are lower quality recordings and they get around the copyrights or they are paying a fee to play them (offset by the advertising).
I found that the best way to use YouTube for the recordings, is by going on an artist's official channel, or channels enforced or backed by the artist) quality is usually amazing and most of the time they are ad free. Another option is any channel that's called {artist name here}-Topic. Usually it's high end recordings that YouTube music uses
They get money for each played video, I just don't know how the downloader programs fit in. In my era they protected that file like crazy and didn't want it to get "uploaded." In the old days when I had time to mess around more, I'd compare my tapedeck mp3 conversions using Sony Acid Pro with other various MP3's found on the net. It was pretty cool matching the waveforms to see how good my recordings were.