Yes, people click a button to indicate start and end of sponsored segments in a video. Those time markers are sent to a DB, and every subsequent viewer will use that to skip the ad portion.
no, it's not on them, it's on you for choosing to take money out of their pocket. They have chosen the monetization revenues that they are comfortable with, circumventing the way people make money while watching their content is highly unethical. You don't show up to a local course or theatre production and use a fake credit card because you dislike the fact that they use visa.
I only use a phone for watching stuff if I don't have a monitor or laptop around. That said newpipe is fantastic when mobile is the only available platform.
I'm aware. I simply prefer Newpipe because it has roughly the same functionality, is more lightweight and is open-source (+ it's on F-Droid so I can easily update it along with all my other apps).