It's similar like Instagram. In your video feed, it would mix some promoted videos.

They're trying to make them more interactive with things like "challenges" and making them look like regular [usually funny] videos.

It's still super easy to skip by them.

Profitability is not required if you are an intelligence asset for the state. In this case, the state is China. Maybe it's legitimately profitable, maybe the Chinese govt is purchasing ads with other companies it owns, maybe the books are entirely cooked. It's hard to tell in China.