YCbCr setting is the preferred for video playback, as nearly all movies, TV series, and sports are encoded for 4:2:0 YCbCr color space.
If you have a reliable and fast HDMI cable (at least 20 Gbps, but 40 to 48 Gbps if you want 120 Hz), I would just set it to YCbCr 4:4:4 for maximum uncompressed video signal over HDMI cable.
If you have a slower cable (20 Gbps or less) or watching primarily video contents, set it to 4:2:0. Games, non-video apps, and Apple TV UI may look more vibrant, sharper, and free of artifacts with 4:4:4. 4:4:4 on slower cable can cause issues, such as flickering and artifacts.
You should only pick RGB output with Apple TV if your TV cannot handle YCbCr correctly. (RGB is primarily meant for computers and some gaming consoles.) You can choose RGB High (full 256 shades for each colors) on most modern TVs. Some TVs do not handle the full range well, which is why RGB Low exists (219 shades).