I mentioned quite a few reasons youtube added this functionality....

. It was user requested btw. You can only really be upset at the content owner. Keep in mind prior to these functions music selection on youtube was extremely limited, generally rip offs and then generally removed on copyright restrictions.
Lets put it this way. If you had a channel on YouTube that was so big you not only turned a profit from it but you made a living doing it would you want people watching the videos on ad free devices? What if your videos were high production and cost you quite a bit of money to make?
However the way it SHOULD work is when using your iPhone you can't even find videos that won't play. I don't have a good example because frankly I can't find any videos that don't play. But another example would be Beck - Blue Moon. You can't find Beck's official VEVO video when searching on an AppleTV (user name BeckVEVO). Without another device you wouldn't even know of its existence and not care.