Except it doesn't give you the actual file, it's still only playable offline through the app (unless you have root I guess).
I have YT premium and an android phone so I checked this out. It looks like they don't store a single mp4 or anything and instead store it in chunks. I am not sure though if they are actually encrypted and stored using some sort of copy protection or if you could assemble the pieces into a single video using some algorithm without a special key.
I would guess it’s similar to the chunking they do when streaming in the first place. Assembling the pieces is one of the main functions of youtube-dl.