When a video gets flagged, it supposedly is queued up for manual review. Upon manual review, if the YouTube employee deems that the video has broken one of its rules, it will take the video down and it will notify the uploader that they have received a strike.
That's all fine, but the problem is really in how they handle this interaction. They tell the user which "set of rules" they've broken (e.g. "Hate speech, discrimination or other forms of bigotry based on race, gender or religion"), but they get no more specific than that. They do not offer a timestamp for the exact moment in which you violated their rules. The result is as you'd expect. I'm sure many terrible videos are rightly taken down this way, but there are plenty of people who don't believe their video violated any rules and are seeking clarification on what they did wrong.
It would also be beneficial for the relationship between YouTube and its creators if there was an opportunity for restitution. For example, maybe YouTube informs the user that their video has violated a rule and if they don't take it down within some period of time, they will receive a strike and it will be taken down automatically (of course, with the knowledge that some types of videos should be taken down immediately). Maybe when YouTube takes a video down, they could timestamp it and tell the user that they can re-upload the video without that specific part.
As it is now, there are people who make their livings on YouTube, and these somewhat vague rules and the nebulous enforcement of them does not instill creators (I'm talking about creators who post about divisive or controversial things - could be something as simple as viewpoints on modern political news) with a feeling of security and the end-result may be that they simply move to a different platform.
If YouTube listens to the complaints of this 'FairTube' group and engages them, I think that'd be best for everyone.