If the algorithm preferred long videos, you'd be better off with one 10m video as opposed to two 5m videos as it would be pushed harder. Whereas if it was agnostic to video length, the latter would be OK.
Regardless, you're correct that watch time may be a motivating factor in making them stretch content longer than it needs to be though. I don't think they get paid for watch time (it's all about ad impressions or CPMs) but it would positively impact their channel statistics.
Ah you're right. There was a change a while ago that did seem to favour creators that made longer videos over shorter ones, but it's not as cut and dry as watch time = more money
Regardless, you're correct that watch time may be a motivating factor in making them stretch content longer than it needs to be though. I don't think they get paid for watch time (it's all about ad impressions or CPMs) but it would positively impact their channel statistics.