"No GenAI, no upscaling. We're running an experiment on select YouTube Shorts that uses traditional machine learning technology to unblur, denoise, and improve clarity in videos during processing (similar to what a modern smartphone does when you record a video)"
https://x.com/youtubeinsider/status/1958199532363317467?s=46
Considering how aggressive YouTube is with video compression anyways (which smooths your face and makes it blocky), this doesn't seem like a big deal. Maybe it overprocesses in some cases, but it's also an "experiment" they're testing on only a fraction of videos.
I watched the comparisons from the first video and the only difference I see is in resolution -- he compares the guitar video uploaded to YT vs IG, and the YT one is sharper. But for all we know the IG one is lower resolution, that's all it looks like to me.