Out of the box it can play audio in the background, and now that extensions are available you can block ads as well. You don’t really need constantly updating 3rd party clients or questionable firewalls anymore if you just want usable youtube on a phone.
The link you’re using here is not telemetry. Telemetry is some sort of reporting on how the app is being used that’s “phoned home” back to the app creators. In the case of NewPipe, as the link you provided shows, there is none of that; and indeed, it only executes enough JavaScript to grab the video download link. Google still records a download, because they own the server (and any access of someone else’s server can be logged), but NewPipe is only sending it (1) the video page URL, (2) an anonymous user-string, required for every web request, and (3) a single, unidentifying query string parameter.
Some apps don’t even send that much, and you can prove it by checking their source code when available.