Oooh ooh, a topic I can comment on.
Some background: I work at a music company and this is a topic that my department deals with loosely. I can give you more details if you PM me. Or find me on Facebook.
Here's what happening on YouTube. YT has a catalog of songs and artists who have set certain 'permissions' on their music. Some say 'anyone can use my music'. Some say 'you have to show ads on anything using my songs and give me the profit'. Some say 'no one may upload my songs. Remove them if this happens'. There's more granualr permissions, but that's the jist of it.
So, they have a system that 'listens' to your music when you upload it and it matches it to the catalog of songs that they have. When you give 'clues' to the song (title/artist) it can make their job easier. Then, they take the action they've been instructed to by the owner of the copyright.
This is a money thing. Artists need to make money from their music and if they're not licensing their stuff to you and you're just using it...then they're not making money. If you upload the video to YT, it's no longer 'personal use'. You've put it out there in the world and have the potential to make a profit from that. It's now a public performance (think about that for a minute--any video you post to YT is a public performance.) If you're making money and not giving to the artist that made the song (or their record company, but we'll pretend that doesn't happen), then that's kind of a bad situation.
ASCAP, BMI, Sentric, and the Canadian versions which escape me at the moment work to collect royalties on music and hold them for the artist. So, you license music from BMI for a fee and they hold that money until the artist comes to collect it.
It's crazy fascinating. The stuff that we can do these days is so impressive.
And, like Pippi said, if it's something that upsets you, set down and write your own. Or, even better, find a local indie band and dance to their music. Contact them and see if they'd do a cover of something you love. Work with your local musicians to make something unique.
Hope that's useful!