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On myactivity (https://myactivity.google.com/myactivity) page of GoogleI have all 3 activity disabled (including subsettings and old data is 'deleted') yet on YT it reflects my searches and watches. So does that mean those settings are for namesake?

I mean, I'm not surprised, I have seen this on fb too, but like why do they pretend?

Will you ever be able to believe Google's promises that it will stop spying on users? As long as it exists, surveillance will also exist. Disable the history of searches and queries on YouTube, abandon the Google browser altogether, or better yet, completely delete the Google account, which can somehow compromise you.

I recently delved into the history of my account, and I was scared of how deeply Google was creeping into my personal life.

In everything related to life on the Internet, it is desirable to do the complete opposite of what is done in real-life offline. 

Your question is about Google's problem. You will not find the correct answer here. You can get specific answer through Google Help Center.So take your problem to  Google Support (https://support.google.com) and try to solve it from there.

I can also recall pausing my search and watch history in my Youtube account, but somehow my Google account still manage to still record those history. Quite annoying to know to be honest.
In my Facebook account, I wasn't even aware that your recently watched videos are all logged even though I am pretty sure that that feature didn't exist before.

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As long as you're registered under some site, you can't expect that whatever you're doing remains not surveilled.

How much of us everyday use android devices which is a kind of google derivative. many communication applications, social media accounts (where we share our interests, reactions...) what privacy to expect from a web browser?
Even I am curious, how interesting it is for someone from there to see what my preferences are while browsing porn sites for example? and why that should worry me?

btw. I use several Google accounts for different devices, browsers and purposes. If nothing, I can overwhelm them with meaningless information, if someone put it all together in one person, I would probably get a mark as a schizophrenic.

I did think those settings were much more of a user experience type thing of either: "show you're tracking me" or "I want to forget you're tracking me".

I doubt they'd actually let you use them, and not track everything they're able to get.