There are also cases of people applying every cycle and never getting in. YC seems to be looking for sustainable companies that can be accelerated. If you weren't going to work on your company without YC, that's a point against you, as far as I know. Not a showstopper, but the overall goal is probably to fund people committed to their startup rather than fund people who might commit to a startup.

The application process is valuable beyond simply getting accepted, though, so it's worth doing.

Yes. Unspoken caveat is that you should show progress since the last time you applied.

I always wonder if there is an internal criteria to getting accepted ie. # of users minimum, working prototype...etc

that is correct.

take everything said here with a grain of salt. as a fund, they naturally want to maximize their deal flow, so they are incentivized against advising you not to re-apply (if you aren't accepted this time, it's mainly your time that's wasted, not theirs).