So YouTube ads can't really be blocked properly with Pi-Hole?

As Pi-hole is a filtering DNS forwarder, it cannot block any ads that are delivered via the exact same domain as the content, unless you are willing to forfeit accessing the content as well. This applies to any site that is doing so, not just YouTube.

Also, Pi-hole can only block those domains that it has been configured to.

There are users creating blocklists and regex filters to sift out Youtube ads, and a recent script-based approach tries to detect and block ad-serving YouTube subdomains and has received some positive feedback. But that is a long-lasting cats-and-mice game between blocking attempts and YouTube/Google/Alphabet getting aware of them.

If you want to partake in that game, you may start by having a look at How do I block ads on YouTube?.