What additional configuration is required? I was under the impression it couldn't be blocked at all due to ads being served from YouTube.com domain or similar.
Would really like to implement it on my own PiHole
Let me offer an alternative answer to tubularhells' unhelpful answer:
There isn't really a good, efficient easy way to block YouTube ads with Pi-Hole. It's a constant cat-and-mouse game of finding the appropriate domain regexes and keeping them updated.
I agree, but to anyone considering setting up Pi-Hole make sure that you don't go "overboard" with blocklists. I did and ended up blocking too much, to where regular Instagram posts, post messages, etc. were removed. It also slowed down my internet considerably, but that could be due to the excessive blocking.
We ended up uninstalling Pi-Hole and removing it from our network, which was a pain in the neck. I remember that simply removing the blocklists wasn't enough to undo the damage, which is why we had to go with the removal from network route.
I've considered revisiting Pi-Hole in the future, and I'd definitely be more cautious that time around.
With pihole I keep getting playback error when video starts basically cause the ad can't play. If I refresh then it plays normally cause YouTube doesn't show the ad the 2nd time being tricked it was already watched.
As far as I know you cannot install adblockers on the Android app for YouTube for example, and probably on other platforms too. I've looked for one but found none.