I don’t understand what the term “demonetization” means in this context.

When a video is flagged for “demonetization” what are the immediate consequences? I’ve never actually met anyone who got paid for something that happened on YouTube, so I just don’t understand how the business side of YouTube even works.

For the life of me, all I’ve ever directly witnessed is the occassional friend who received a DMCA notice, because they uploaded an audio rip of an album they wanted to listen to from a work computer, as a public video.