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By existing. (Yes, that’s the only argument they made. There is no assertion that anyone associated with Yuzu “cracked” (not necessary) or actively distributed TOTK.)
It’s a distraction. It’s literally impossible for it to be relevant unless the yuzu project page hosted TOTK files.
There are a bunch of free channels on the internet that some TVs can just stream without a dedicated app. These channels are supported by ads like cable/whatever channels, but not locked behind a subscription. VLC is supporting whatever formats they use to allow (or make it easier; IDK) people to watch them if they want.
The other part is that they’re working on web assembly to allow sites to use VLC as their embedded video player.