Since a lot of people will come to the comments without reading the article itself:
It is embedding the Youtube video, like a lot of websites and apps do - if you ever watched a youtube video outside of youtube.com or official apps, odds are it is using the same API as that app.
It still shows ads and uses the Youtube website directly for certain parts, but with some custom CSS and JS akin to how browser extensions would work.
From the article (right under "Can I give feedback"):
I’ve only been able to develop this in the simulator, which obviously has its limitations, so once I get my hands on a device this Friday I’ll probably have a lot of thoughts on things I want to improve as well.
the 300/month is for the 5$ plan? possible "fair use"-like hidden limits aside, the 10$ sounds unlimited
from their front page they claim that "We do not log or associate searches with an account", and their privacy page is fairly detailed
the story is written from the perspective of a literal toaster, not a human
(the primal urges / bodily needs being just normal hunger for food)
Out of all things to hate Reddit for, giving data to AI isn't something fediverse users can really criticize it for, though making money from it perhaps.
Remember: All data in federated platforms is available for free and likely already being compiled into datasets. Don't be surprised if this post and its comments end up in GPT5 or 6 training data.