Note: This is actually a pretty outdated post now. YouTube has updated their video processing and audio support tramendously. Not only do they support higher quality audio, but they also support 5.1 surround sound! I'll keep the original post here for archival's sake. Do I now support downloading from YouTube? No. But I'm not going to hide the fact that they've improved in the past three years.
tl;dr - It's a terrible idea.
A frequent question I see on YouTube music videos is "How can I download this song?". A common answer to that question is to use a "YouTube to MP3" converter which will take the video and extract its audio stream (AAC), convert it to MP3, and then let you download it. Yes, you get the song, but let's be honest... The quality of that file is pretty shitty.
I know, I know, a lot of people do not care about the quality of their MP3s... and shame on them. The file you get from these sites are 128kbps MP3 files. I suppose that is average, but the bitrate doesn't matter as much as YouTube's process of literally destroying the audio to make it streamable on the internet. There are frequencies that are tampered, the sample rate is forced to 44,100hz (Which isn't really a problem most of the time), and due to the low bitrate, you can barely hear bass and everything sounds garbled. You really think that is a pleasurable listening experience?
I make music. Great! I can use an example I know I won't get sued for. Here's a song I made.
Yes I know, you want to download it (No, you don't). If you downloaded this video, you would get a 128kbps MP3 file at 44,100hz. Want to know what the original audio file was for this video before I uploaded it? 320kbps AAC at 48,000hz. That is more than 2.72x the detail lost in the YouTube encoded audio file.
Here is the waveform for the song in the original audio file:
Here is the waveform for the song downloaded from YouTube:
Here's the fun part. we can use inversion to cancel out the waveforms and see what is different in them. This is how much audio was lost by encoding to YouTube:
That was the simple explanation. To sum it up, YouTube will down-sample your music, and then lower the bitrate, as well as remove certain frequencies that presumably the human ear can't hear (MP3 does this too). So next time someone asks for a download of a song, don't suggest a YouTube downloader for them. Give them the original MP3 or FLAC because YouTube destroys the quality of the audio.