The news is for a Premium subscribed member, now you can see the “Recently played songs” toggle in Settings > Downloads & storage. It is already enabled for most of the devices as a “Smart downloads” feature, which goes up to 500 songs and is based on music that the app deems to be “favorites.
For now, there is now dedicated playlist for songs in the Library tab. They appear when you use the “Downloads” app shortcut by long-pressing the home screen icon. It was first introduced in YouTube Music’s February 2023 Features Highlights. Now, it is widely rolling out on Android. Note that the iOS users need to wait as the setting of the Recently played song has yet to be announced. However, that same list of New Features touts the launch of Smart Downloads for iPhone and iPad earlier this year, as well as “bug fixes” on Android:
If you explicitly delete a Smart Downloads recommended playlist, our systems should make note of this feedback so that we do not recommend the same music to you in future playlists.