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LibreTube - uses Piped as video source by default. Subscriptions and playlists can be created, all without actually interacting with YouTube.
Clipious - uses Invidious as the video source. Also allows for subscribing and accounts. Lesser known client
NewPipe - Gets the source directly from YT. Allows for subscribing and creating playlists
Additionally, there's also ReVanced that lets you patch the regular YT app to include useful features.
Exactly. That's the issue. Selling software means generating revenue, thus Grayjay is a commercial product. That's exactly what YouTube Vanced was shut down for. Generating revenue from accessing YouTube in an unauthorized manner. Grayjay does use the YouTube API, but not the official one. YouTube has 2 sets of APIs. The official one with clear terms and conditions, which is only accessible with an API token, and the unofficial one, which is for example used in the YouTube mobile app. There is no official documentation on this API, and it was only discovered through reverse engineering. YouTube doesn't allow using this API from an unofficial client (they're not that strict about it, but nonetheless, it's technically forbidden, as the APi is not meant for public usage).
Unless they were to stick a TOS, usage agreement, or API key requirement on Innertube then anyone's free to use it however they like. Legally, Grayjay is in the clear here. And practically they're fine as well since altering Innertube to block Grayjay would mean that Google would have to alter their in house processes and that costs money.
YouTube Vanced didn't accept any TOS either, yet they got sued and were forced to shut down
And the difference there is that Vanced didn't have capital behind it while Grayjay does. Futo can fight Google in court, Vanced couldn't. Even if a company has no legal ground to stand on, they can still fuck you financially with legal fees and a drawn out case.