I think the main point is, this makes it unavailable in F-Droid and everyone else unable to build upon, use or adapt it for their own use-cases except for the specific ones outlined by FUTO. It's source-available software. Not free software. And it has other downsides, too. Once YouTube starts cracking down on third-party apps and the companies behind it, it's gone for good. yt-dl has demonstrated free software offers more resilience in those cases.

And I'd argue it's ineffective. Having a license forbid malicious use will only stop the honest people from using it. The bad players will probably not care. But that's debatable.