They may in fact not know what you watched. I was having an issue with my youtube recommendations becoming generic to the point of irrelevance, when i went and looked at my watch history and it hadn't been updated in MONTHS despite me watching youtube daily.

Turns out that pi-hole was blocking the endpoint that records the watch history! IIRC allowing queries for something like s.youtube.com made my watch history start working.

I agree that they should know w/o all this client based nonsense but :shrug:. They don't, somehow!