What this means is that if you choose not to put ads in your YouTube video, they'll still take over and put ads anyway. You also won't gain revenue from those ads unless you sign up to YPP. YouTube explains:
"Starting today, we'll begin slowly rolling out ads on a limited number of videos from channels not in YPP. This means as a creator that's not in YPP, you may see ads on some of your videos. Since you're not currently in YPP, you won't receive a share of the revenue from these ads, though you'll still have the opportunity to apply for YPP as you normally would once you meet the eligibility requirements."
Over the years, a lot of creators chose not to put ads into their YouTube clips and that choice means people can view content without disruption. YouTube's new terms will chuck ads on non-monetised clips, and personally I don't like seeing ads in videos.
On the other hand, this will lead to a significant increase in available ad space on the platform, and will provide YouTube with more revenue opportunities. It's a two-way game anyway.