Transformative refers to how the works of art are used. For example, if I make a compilation of every single Barry Bonds homeruns the clips of the games are copyrighted but the video I produced isn't a substitute for an actual baseball game so the resulting work is transformative even if none of the video footage has been altered.
A derivative work is typically what the generative AI produces where you could see elements of an original work but there are changes (i.e. the source work but shaded purple).
A transformative work may be literally the source work but used in a different context/purpose (i.e. a 5s clip of a 2h soccer game used to show proper throw-in technique as opposed to the original purpose of a sports game).
In the big picture, I expect generative AI to replace stock imagery and in this area I think this court case throws a huge wrench into that. If you're licensing generative AI instead of licensing the source stock imagery this case is going to be cited as why what you've done is illegal.
But certainly the copyright holders would succeed in getting your video taken down from YouTube since it wouldn't be a DMCA request. (Fair Use doesn't mean a private company must host your video).
[1]: https://www.citizen.org/article/a-guide-to-fair-use-in-posti...