Sure they can. DNS black holes can only work when ads are served from a known and distinct set of domains than than the intended website content. If the domains are the same, then one cannot distinguish between an ad and content at the DNS level. In an extreme example, DNS black holes cannot block "baked-in" sponsor reads precisely because those are indistinguishable from content.

Moreover, adblock detectors tend to apply introspection to the page as it's loaded, to see if the ads have loaded or displayed correctly. A DNS black hole will often properly prevent the ads from loading, but this is exactly the situation that the adblock detector looks for. I would not expect a PiHole to offer any great advantage over something like uBlock Origin.

YT ads cannot be blocked this way as they aren't served from a distinct domain.

DNS blackholing only works for third party ad servers. Twitch has already started embedding ads right into the stream, youtube can't be far behind.

Or even better, NextDNS, which works on every device, on every network, not just your home network.

Until they serve ads from the youtube domain