Look up how HLS (HTTP Live Streaming) works. They just need to generate a personalized playlist for each person which points at things already hosted on CDN, and insert the ads where they want in the literal text file that your video player reads from to serve you the video.
I don't know much about it, but it looks like there's specific tags designed for dynamic ad insertion. Idk if YouTube plans to use them in this case though, if they want it to be undetectable to the client.
The US is a representative democracy, not a direct democracy. You elect representatives to represent your interests. Or these days, you elect representatives to not represent the other people you don't like.