Yes, it's up to the parents. But unless you have time to pre-screen every minute of content your kids watch (hint: if you have a job, you don't have time to do this), at some point you have to trust a ratings agency like MPAA, ESRB, or a company like Google when they say - "this content here, it's safe for kids". The obvious problem is that YouTube Kids is utterly failing at this.
What's the realistic alternative? Watching hours upon hours of kids content on YouTube and creating your own playlists? How do you stop a child from going to a "recommended video" afterwards? What about ad content, how do you filter that?
Edit: The only realistic alternative is not letting kids watch YouTube. This is fine, but then maybe Google should not be advertising a section of YouTube as "for kids".
And even then, things get pretty sexual.
I would argue that if your kids are watching so much of this stuff that you don't have time to monitor it, they're watching way too much of it. "Hours upon hours" is definitely way too much.
Your kids will survive even if they're not plugged in to streaming media 24/7/365. Really.
Today on HN there was an interesting discussion on addictive apps - https://news.ycombinator.com/item?id=15662004
In essence you have parents vs the best funded organizations in the world, packed with PhDs working full time to grab all our attention, children being the most susceptible. The only advantage parents is physical proximity. Disadvantages include lack of time, knowledge, awareness etc. I'm not betting on parents winning