It sure can, but so far I've not found much use for it. I set it up to see if it can block YouTube ads in the mobile app, but it can't. Since I already use uBlock Origin, I don't know what I gain
At least from my experience, with a proper blacklist it shuts down a ton more stuff. Not just pure ads, but a ton of tracking and websites/apps phoning home too. You can configure it to be as strict or lenient as you'd like, basically. For me it's nice, because I can just apply it to the entire network, and I don't have to worry about trying to explain how this works to my family
Also has the benefit of being a completely local DNS server for all your devices to use. I think you are also able to add custom entries if you wanted to be able to refer to your devices using dns. It also has some caching benefits so there are less DNS requests going out of your home network.
Personally I set up AdGuard Home because it has DNS over HTTPS support out of the box, which means your ISP cannot see your DNS requests. Pihole supports this too, but it requires additional setup.