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For example you visit coolblog.org and it tries to load coolblog.org/ad.js

dns blocking would only see the domain coolblog.org, and doesn't see that it loads ad.js, so it won't block anything.

But e.g. uBlock, also sees that your browser tries to visit ad.js, if uBlock had ad.js in its blocklists it can block loading this script.

So for example YouTube serves their own ads so you can't skip YouTube ads with a DNS level adblock you need ublock origin which can block anything referenced in HTML which is why it works for skipping ads on YouTube.

Pretty sure they are referring to cosmetic filtering which is not possible at a DNS level