Low quality saves cost for YouTube and YouTube thinks that you won't notice the difference between 480p and 1080p on your phone. They don't fuck with your quality on desktops because they know you'll notice that
For example on desktop if you skip through a video while it's set to auto (1080p) at some point it will fall down to 480p. Maybe because YouTube thinks your connection has an issue, or maybe they just want to save bandwidth. If you manually set it to 1080p it stays there.
The player prioritizes smooth playback over quality. If you're skipping through, you're bypassing any buffer it's built up, so it'll drop the quality in order to be able to actually start playing sooner.
Pretty sure YouTube messes with it on desktops as well. Might default higher, but I had to use that advanced YouTube add on to force it to 1440p (or next highest) because it would constantly make me select it.
I mean, if you’re using your phone, you’ll barely notice the difference. The only reason I care about higher resolution is because they’re the only options with 60fps.
Difference is definitely noticeable on modern phones. But the biggest issue is it will do this on desktop and tablets as well, where you will really notice the difference.
And like you said, YouTube 480p mode doesn't have 60fps. That's noticeable regardless of screen size.