Horrific. Is it temporary?
I can just click the X and watch the video.
I'm not a Google employee or anything, so I can't speculate beyond that.
In theory, they can (with some degree of success) block the content unless you allow ads. That's a lot like work and usually requires updating as ad blocking advances, but you do things like assign a UUID to the ads themselves and then only show the content when the script confirms that it was loaded.
I don't know much about the new message beyond that.