No, that’s not what they are talking about. Even if you set the video to 1080p and make sure that YouTube isn’t lowering it to a lower resolution, it still won’t look very good.
Whether you notice or not depends on how perceptive you are, the quality of your eyesight and also the size and quality of your display. It’s hard to notice on a low-grade laptop screen (or smaller), as well as a cheap TN panel monitor, but go beyond around 20" and use a decent enough IPS panel and those blocky compression artifacts are hard to miss.
This wouldn’t work, given that TikTok isn’t allowed in China. This cyberweapon is only meant to be used against foreigners. Either way, don’t help them and instead actively dissuade them from trying to keep their addiction alive.