Am I the only one to find Google to be completely stupid here? Aren’t they missing out on a chance to push videos with ads?

Yes and no. Without a users video history (& other tracking turned off) best they can do is push random ads hoping it would hit one in a million. That is not effective and sometimes even diseffective (hitting a controversially opposite target). Tha harms YouTube on both ends more than the ad’s company

By pushing users to turn it on they apparently gain more than just pushing random horse crap.