I’ve not seen this before but it was strange.
An ad loaded at the end of a video, so I paused it. What caught my eye was the background was moving when I moved my phone, which turned out to be the room I was in. The ad was overlayed on whatever my camera was looking at, but the ad appeared stretched from a single point in the middle of the screen, which was even weirder.
Edit: The ad was using the rear camera, not the front facing one.
I’ve looked through my phones settings and there are no options to toggle YouTube’s camera access either, so I feel like it’s safe to say this is being forced on users (surprise /s).
Needless to say, that app is no longer on any of my devices :)
I hope this is the awakening you need to get rid of Apple devices, as well as all crappy spy devices, and use a privacy friendly setup such as GrapheneOS.