YouTube, makes its money through advertising. It provides ‘free’ video content for you to enjoy, and you return the favour by viewing some ads.
It’s obvious that Google would want to avoid you downloading its content. Not only does it want to protect its earnings potential, but it has to protect the content creators who upload video to its site who may also be making a living from that content, But you find applications/softwares that can allow a user to download the videos from Youtube.
But is it actually illegal to download YouTube? For personal use, no it is not illegal to download YouTube video.
Downloading video from YouTube does breach Google’s terms of service. Within Section 5.1 it states: “YouTube hereby grants you permission to access and use the Service, subject to the following express conditions, and you agree that your failure to adhere to any of these conditions shall constitute a breach of these Terms on your part: you agree not to access content through any technology or means other than the video playback pages of the Website itself, the YouTube Player, or such other means YouTube may explicitly designate for this purpose.
A major concern with downloading YouTube video and using it in your own projects or for your own gain is the ease with which you can fall foul of copyright protection.