It's mostly teenager dancing stuff, yes. If you start liking political content you'll get political content too. I've found there's a lot of pro-China, both soft-power "look how pretty the countryside is" stuff and straight up Uyghur denial. There's also a decent amount of anti-China activism on there as well, though.
E.g. several people at my work (engineers with degrees) seem to absolutely trust everything they hear on "comedy" talk shows. And not only trust, but eager watch all new episodes and discuss between themselves at work. Those cannot be propaganda because it's just a joke, dude?
2. They can get information on kids now to be used against them in the future as blackmail (and similar) when those same kids become politicians. Say what you want about the Chinese but they are great at long-term 5, 10, 20 year plans.
Dances may have been tiktoks start but the shift to shortform videos on a specific topic in rapid succession meets the criteria of propaganda. Particularly if they are humorous or provide a dopamine response.
China much like twitter and facebook and youtube has complete control over what their supposedly "unbias" algorithms direct users to. It is trivial to push propaganda between dances and jokes. Swaying public opinion has never been easier than in the social media age.
I see my kids look at TikTok all the time. I don't really see how you could spread propaganda through 5 second dances and jokes. Especially since peers are doing that.
I would think the Party influence on Hollywood and other entertainment such as Computer Games would be way more disturbing. Injecting propaganda into a real story seems way more effective. Especially when you fully control the medium.