The problem is Tesla chose the word "autopilot" (and "full self driving") rather than "supervised self driving" or something like that, but then Elon is a four-letter-word when it comes to marketing.
You have to always be paying attention -- because it's still level 2 supervised driving. So what's the point? Well, it is a pretty good way to get training data in the real world without spending much $ so obviously attractive to Tesla there. And it gives the user a 'taste' of what an FSD car might be capable of. Still not worth the $10k or whatever they're currently asking for it, but fools and money I guess.
I drive a car with adaptive cruise control, from VW; in the manual there's about 20 warnings along the lines of what the system won't do. It won't stop for totally stationary vehicles. It doesn't see pedestrians. It doesn't adapt to the weather conditions. It might brake sharply if you get cut off. It might accelerate unexpectedly if you leave the road (e.g. motorway exit). It might accelerate unexpectedly if it loses the radar signature from the car in front, and you're on a sharp bend. Despite these limitations, I would not buy a car without this function. Provided you're aware of the system's limitations, and are *always* supervising it, it's a good way to reduce driver fatigue (your brain is no longer running the complex "regulate-speed-and-distance" algorithm, instead you're just "stay in lane, watch out for weird ACC stuff") which brings more safety benefits than the disbenefits of the system.
I think the Tesla AP/FSD beta should be treated this way; it's a fancy lane-assist and speed-assist system, which means you can turn your brain from "driving mode" into "monitor mode", but you cannot be using your phone or idly ignoring the road conditions. Dan O'Dowd might as well say, "look at this modern car with ACC, it ignores children in the road" ... failing to note that it's a supervised system that isn't designed to respond to that specific circumstance.
It might be interesting to note that O'Dowd also has some interesting competing interests that he doesn't disclose in the video, or in general. He owns a company selling safety-critical software and has been critical over Tesla's use of Linux (instead promoting his own operating system, 'Integrity') despite no obvious issues arising from Tesla's choice of OS.
N.B. It seems many in the press confuse 'AP', 'Nav on AP' and 'FSD Beta'. 'AP' is the original system based on Mobileye chipset, it's pretty much the same as 'lane hold' in a modern car. 'Nav on AP' is based on the Tesla AP computer and is rated for highway use only. 'FSD Beta' (also known as 'City Streets') is a closed beta for individuals with a certain attentiveness score, based on a few factors disclosed like time to take over after AP requests. Most 'FSD' issues are actually 'Nav on AP' or 'AP' issues. I'm reasonably sure the video is showing regular Nav on AP; the system is simply not *trained* to process the idea of a small child appearing on a highway.