Update 2020-10-24
It's not likely that you'll be able to block in-video ads with Pi-hole. For that, you'll need something like uBlock origin for desktop, or vanced for android (Now defunct), or pay for premium
This thread has been closed as there is not much more discussion to be had around the topic.
Update 2018-11-14
User's have had good success here:
I'm updating this top-level post as of 2018-10-16 since a lot of people land here.
Blocking ads on YouTube is hit or miss with Pi-hole. The reason for this is because ads are typically served from the same domain as the video is.
Many users see unique domains in the logs such as r4---sn-vgqs7nez.googlevideo.com
and have had some success in blocking these, but there are so many and it's different for different people, so it's not foolproof.
Also, within this thread, you'll find lots of scripts and regexs, which may or may not work for you. Feel free to explore and report your findings on this thread.
Bottom line: blocking YouTube ads is a moving target, and you'll probably have the best luck crafting a complex regex to add to your blocklist.