Yeah, but they aren't making nearly the amount of money on the video as they would with the ads, and no where near enough to compensate the creators beyond free hosting.

You can still publish demonetized content, just don't expect to make money from it on YouTube.

I didn't say it's charity. I said the video creator (who wants people to see their video) is receiving a service from the video host for no charge, which otherwise the creator would have to pay for. Hosting your own video on your own storage and network bill is not free. If you don't believe me, go try doing it yourself.

If the creator didn't think they were receiving any benefit, they would just take that video down. They sometimes do, but usually they don't.

Publishing a book costs money. Someone has to buy the paper from the paper makers, and the ink from the ink makers. Someone has to line up the print on the page. Those people have to get paid, so they can go buy a sandwich and pay their rent. So, publishers exercise some judgment in not printing books that they don't expect to sell, because they've gotta pay their bills, including parts and labor.

Same goes for video. Hosting a video costs money. Servers cost money. Power costs money. Network connectivity costs money. The people who run those services need to get paid so they can buy a sandwich and pay their rent. If YouTube is hosting your video, even if they're not paying you a share of any ad revenue (because they're not getting any), they're paying bills that otherwise you would have to pay.

I'm not saying you've gotta be grateful or something. I'm saying if you want to understand what's going on in the world, you can't do that without understanding the actual bills that people are actually paying.

To put it simply: The hosting costs of demonetized videos are paid for by the hosting of monetized videos.

Don't believe me? Take your video and store it on a server that you pay for, with network connectivity you pay for. That's a thing you can do. You can even do it with Fediverse technology. However, it will in fact cost you some amount of money.