The reason it was changed was to avoid the plugin trying to define how materials are assigned, and instead just yielding to the standard SolidWorks rules of material assignment. That was the general sentiment in the feedback I received on the earliest version (contrary to your opinion, apparently having liked the old method), so, in all subsequent versions, all one needs to understand about material assignment are the standard rules of precedence used in SolidWorks standard materials, meaning:
1. assignment at the feature-level overrides assignment at the body level
2. assignment at the face level overrides both feature and body assignment
3. assignment at the component level overrides all other assignments
4. component-level assignment is only effective in the .sldasm where it is performed
So, if you have a .sldprt, you can begin by assigning a material to the body itself. Selecting a feature and assigning a material will override what you had just assigned to the body. Selecting one of the faces of this feature will override both the previous feature and body assignments. If you then include this body in a .sldasm, you can select the insert at the component level and assign a material; this assignment will hide all of the assignments you made in the .sldprt.
The two most important features the plugin provides you in regards to this are:
1. the 'Select this Entity's Parent' button (green arrow) in plugin's Object Properties toolbar
2. the hyperlink that the plugin provides in Object Properties > Selected Object(s) > Info
SolidWorks normal way of working with these things is, in my opinion, very cumbersome. As you know, SolidWorks has no 'material table' like you may see in many other modeling applications, so your materials are scattered about, and it becomes a pain to select an entity, remove the materials from all of the various levels at which they may be defined, and set up the entity to look how you want it to. These two items in the plugin's Object Properties are meant to alleviate this by providing a much faster route from one place to another. For instance:
1. you select a face
2. to learn what material is assigned to its parent feature, click the 'Select this Entity's Parent' button
3. to do the same for the feature's (and the face from step 1) parent body, click it again
4. if you are in an assembly, you can move further up to the body's component, and so on until you reach the top
Alternatively, if, at any of the steps above, the case is that the currently-selected entity is deriving its material from a parent, you will find that there is a hyperlink to that parent in Object Properties > Selected Object(s) > Info. Clicking on this hyperlink will select the entity referred to, so:
1. you are in an assembly, and you have assigned a material to a part at the body level
2. you select one of the faces of this part
3. Object Properties > Selected Object(s) > Info reads: 'Info: material source:Body'
4. clicking on the hyperlink will select the body being referred to
The video you referred to is terribly out of date, and I was not aware that it was even being made available anymore; I'll try make sure it is taken down to prevent further confusion, and I'll try to find the time to make a new one. In the meantime, let me know if the info above is helpful, or if you have any other more specific questions.