Well like your quote says, the problem is infringing on DMCA legislation, not Youtube ToS (though Youtube ToS forbidding such use is what triggers DMCA arguably). DMCA is not a problem at all in Europe, where we have stronger exceptions to copyright (private copy, accessibility, education, etc…) but youtube-dl was hosted on Github which is an american company owned by Microsoft, so where US law applies. That’s why we need decentralized forging to redistribute the digital means of production.

Further extract from the DMCA request:

For example, as shown on Exhibit A, the source code expressly suggests its use to copy and/or distribute the following copyrighted works owned by our member companies

Looks like we were both right :)