AI Block for YouTube stores your settings in Firefox so it can remember how you want YouTube filtered.
To do its job, the add-on needs access to YouTube pages. That is how it can read the channel information shown on the page, compare it against the blocklist, and then flag or hide matching results for you.
It keeps a local copy of the blocklist in your browser and also keeps any channels you have personally added, so blocking can happen straight away. It also stores your own settings, like whether you want channels hidden and whether you want Shorts hidden.
It checks for blocklist updates from a plain text source. That file is just data, not code, and it is used only to update the local list the add-on works from.
If you report a channel for review, the add-on may send the channel name, the channel handle if it can find it, the YouTube page you were on, and any notes you typed. That is sent to the review endpoint so the report can be checked and the shared list can be updated.
It is not built for advertising and it does not exist to sell your data.