yt-dlp (with --add-metadata) puts the channel name in the artist field and the video title as the track name. With --embed-thumbnail, it uses the thumbnail as the album art. This can all work, but only if your artist puts just the name in the title, and uses the album art as the thumbnail. The problem is when they don't.

I usually use mp4 but what format do you suggest?

I personally have a Bash script that kicks up a yt-dlp Docker image.