I know, after blocking this subdomain youtube watch history won't be tracked (saved) even if user is turned on it in data and privacy section of google account setting.

So, doesn't save watch history also mean youtube doesn't count views of users who block this subdomain ?

Why not just turn off watch history?

But that's not my question. 😐

No one can answer your question unless they know the internals of how youtube works. It's quite possible for the view to be counted by some other means completely separate to a user's watch history.

I watch without an account and they're definitely tracking my watch history regardless of that

Right, I don't think you can turn off tracking without account although the solution in this case is as simple as watching in a private window in firefox (chrome's icognito is not reliable)

Does it stop tracking? No one knows.

But if you can block it and everything still works, then it can't be anything good. So block it.

You could determine this pretty easily by uploading an unlisted video and then checking on an unrelated device that is blocking the domain.

You can block this at the router. No watch history for anyone.