So, what is your suggestion here? Should they run with the most open interpretation (i.e. allow anything that is socially acceptable somewhere on earth) or most strict interpretation (i.e. limit stuff that might be offensive somewhere on earth)?

Both approaches look rather impossible to me: the former would mean allowing stuff that might even be illegal in the U.S., the latter would mean that e.g. all videos showing alcohol would have to disappear.

What is your specific example here?

Also note that this is not about allowing videos onto the platform, but only about next to which videos to show ads. And I would guess that most ad customers would want rather strict rules, so it makes sense for YouTube to listen to their customers here.