Yes, it's true that they don't block all ads by default; apparently this is a setting.
And in selective mode, they control the policy for which ads get displayed, which would be the whole point of installing a selective ad blocker. It's not inherently wrong to do that; if you more or less agree with their policy, maybe that's the setting you want?
Taboola is one of the companies that paid Adblock Plus millions of dollars to not block their ads[0]. Taboola is the billion dollar company shoveling the "mom's $5 wrinkle tip, doctors hate her" trash[1].
Adblock Plus plainly acknowledge that those aren't "acceptable ads"[2], but unfortunately they've handed over the whitelist to a completely, 100% independent committee. It's out of their hands now and they're "hopeful" that those people will remove Taboola soon. There's a thread from 2015 asking them to remove it[3]. Convenient.
We both know most people don't spend time reading the options page of their browser extensions. If you download an ad blocker it should block ads. Having to check a check box to get the functionality you paid for is unexpected. Adblock is able to make millions of dollars because most don't know to check it. Most people just want to not see ads, a "selective" ad blocker happens to be the most famous because it was the first popular ad blocker that pivoted into a lucrative rent-seeking operation after becoming a household name. I've heard the euphemism "default opt-in".
According to the author of uBlock Origin it uses less resources[4].
Unless you work for Adblock or Adblock Plus or the companies that paid the bribe there is no reason to recommend it.
re: "Adblock Plus plainly acknowledge that those aren't "acceptable ads"
That link goes to Adblock's page, not Adblock Plus.
Their explanation of why they can't block it ("whitelists always override blacklists") is purely technical and is of course something that could be changed in the code - but maybe their contacts with advertisers say otherwise?
I don't see anything particularly wrong with Adblock or Adblock Plus making millions of dollars, but customers who aren't satisfied with this should of course switch to something else.
Adblock Plus is not Adblock's independently acting "friendly rival". Adblock was sold to a "mystery buyer" in 2015[0]. The first thing that buyer did was turn on "acceptable ads". Come on. It's the same people.
I call "Adblock" "Adblock Plus" to avoid ambiguity with ad blockers in general.
I'm not making value judgments, I'm explaining why saying Adblock and Adblock Plus "is just a way for advertisers to decide what ads users see and don’t see, depending on how much they’re willing to pay and be held hostage to such extensions" is completely accurate and not "misleading". The site you linked that explains their policy is corporate propaganda.
There's no point in even acknowledging their "technical explanation". It's a <10 line change that calls String.prototype.replace() on instances of "taboola" in the whitelist before enabling it.
There are no "satisfied customers" of Adblock Plus. There are only people who heard about Adblock/Adblock Plus in the news or mentioned somewhere else or because it's the first google search result (the first mention of uBlock Origin for "block ads" is on page 11 and it's an unrelated reddit thread in the uBlock Origin subreddit) and don't know about these practices. If you showed them a screenshot of Taboola ads they would not think those are acceptable. That's is why everyone here recommends uBlock Origin.
Adblock Plus does not block all ads and they control which ads are displayed and which aren't. If anything the name Adblock is miss leading.