It's technically a personal video-watching app, not a Youtube app, which you're supposed to link with your own personal video server, but the server APIs it is compatible with are the same APIs that are exposed by Invidious and Newpipe instances. This is not a coincidence.
I'm sure Apple is going to delist it from the App Store at some point (App Store guidelines are just that, guidelines, and there's no getting around them with a weird loophole like you can do with actual laws), but it works for now.
Hence F-Droid, which cannot exist on iOS.
There are three aspects that people often conflate, the ability to install apps from outside Apple's App Store, the ability to install apps that Apple hasn't notarized, and the ability for developers to skip paying a percentage of app sales to Apple.
We might get all three of these, but we might also get just one or two. I can imagine a world where you'll be free to install a .ipa from any website and pay for in-app purchases with your credit card, but where the .ipa will have to go through App Review and the developer will be audited to ensure that the necessary fees go to Apple.