When your device sends out requests to the internet, the vast majority of them are encrypted with SSL. SSL encrypts your requests so that middlemen can't inspect or change the content of your requests. Without SSL, anyone would be able to do anything with your data, which of course would be a massive security problem that just cannot happen. Unfortunately SSL also means middlemen adblockers (like PiHole) can't see or modify the contents of your requests either. The only way for PiHole to block requests is by using the only necessarily unencrypted part of the request: the destination IP address.
Without being able to read the destination IP address, all the middlemen between your device and your destination server, wouldn't know where to forward your request. Your request would never make it to its destination website. The destination IP address is retrieved when you access a website. When you type google.com into the address bar, your computer sends out something called a DNS request to something called a DNS server. That DNS server sends back the destination IP address for the website you're trying to access. This DNS request is unencrypted and so PiHole can simply intercept it before it leaves your network, check if it's an ad domain, and if it is an ad domain, send back trash data to your device instead. Your device, unable to retrieve the destination IP address, is now blocked from accessing that content.
To prevent people from being able to block their ads via DNS, Google hosts ads on domains which are critical to using their services. For example, YouTube ads might come from youtube.com. This way, if you block YouTube ads using PiHole, you are also blocking the entire YouTube service as well.
UBlock Origin and other browser-based adblocking tools are able to block with a more fine-grained approach because they live in your browser and don't have to worry about SSL.
Without being able to read the destination IP address, all the middlemen between your device and your destination server, wouldn't know where to forward your request. Your request would never make it to its destination website. The destination IP address is retrieved when you access a website. When you type google.com into the address bar, your computer sends out something called a DNS request to something called a DNS server. That DNS server sends back the destination IP address for the website you're trying to access. This DNS request is unencrypted and so PiHole can simply intercept it before it leaves your network, check if it's an ad domain, and if it is an ad domain, send back trash data to your device instead. Your device, unable to retrieve the destination IP address, is now blocked from accessing that content.
To prevent people from being able to block their ads via DNS, Google hosts ads on domains which are critical to using their services. For example, YouTube ads might come from youtube.com. This way, if you block YouTube ads using PiHole, you are also blocking the entire YouTube service as well.
UBlock Origin and other browser-based adblocking tools are able to block with a more fine-grained approach because they live in your browser and don't have to worry about SSL.