Ed, here's the way I understand it.

KEY is not a lock box. KEY relates to the "scale", but other notes (not in the scale) can exist in a piece that has been "designated" to be in the key of X. In sheet music, those would be indicated with either a #, a b, or a "natural" symbol by the note (not at the beginning of the clefs).

Technically, in sheet music, you could "write" a piece with all the notes of a G major scale, but "call it" in C major. Nothing changes except the sheet music looks wonky, and other musicians will have a hard time understanding your "explanation".

Diatonic chords are the chords based on (having the root note of/built off of) the notes in a scale. Every note in the triad is in the "key/scale". In Cmaj--C D E F G A B. Those chords will always follow the same pattern (Cmaj, Dm, Em, Fmaj, Gmaj, Am, and Bdim). Her's where the Roman Numerals and Nashville System come in handy. The seven diatonic chords in a natural Minor key follow a different "pattern", though they are also based off the root note in the minor scale. There is a reason for this, but all I know is that it works that way. Other "rules" for this pattern exist for other scales and modes.

You can't go wrong if all your chords are Diatonic to whatever scale/key you're writing in. But you may get tired of writing every song that way. Because you are not limited to diatonic chords. Same with a melody. You can't go wrong if all the notes of your melody are in the key/scale. But they all don't have to be.

I've seen enough of this guy's videos (dozens of them, by now) to believe I understand where some of your confusion comes from. He may say something like "that chord doesn't belong in the Key"...but then he goes on to explain how the chord you chose actually does fit. Maybe it's a brief key change. Maybe it's "modal interchange" or a borrowed chord. There's nothing wrong with the chord (if you like it). That info may be helpful to a lead player as well. All it is is a way to "describe" what you did, not a box to get locked into.

The "theory" is only a means by which you can make informed choices if you know what those choices are. Or you can just play the dang thing and let other people figure out what you did. If it sounds good, it is good.

Let's take all this to BIAB. YES, it's good to know what "key" you are writing in. It's very important if you want to read or print out sheet music. It's very important if you want to know what the diatonic chords are for that key. There are even some RT's that apparently more-or-less ignore the chords and just play notes in the key/scale you entered. I've found it helps in other ways as well. If you don't care about any of those things, don't worry about it, just enter your chords and have fun.

It's not important what "key" you are writing in for every chord choice, even if you know what it is. Follow your heart, head, and ear.

BIAB 2021 Audiophile. Windows 10 64bit. Songwriter, lyricist, composer(?) loving all styles. Some pre-BIAB music from Farfetched Tangmo Band's first CD. https://alonetone.com/tangmo/playlists/close-to-the-ground