As far as I can tell, they aren't doing a very good job. I've seen the notice that an ad blocker is not allowed, and even without upgrading the ad blocker I use I can still just click the close button on the notice and it goes away and I can continue to watch uninterrupted.

If Google does figure out how to prevent people from using ad blockers on YouTube, I think it will help me break my honestly unhealthy habit and reduce the amount I watch, or perhaps even quit entirely, since there are far more ads on YouTube than there were in the past - especially if you also include sponsor ads that are embedded in videos.