Whats the deal with covers?

If they use an official instrumental, yes. If they find a 'fan-made' instrumental, there MIGHT not be any troubles.

I think the main thing is that the vocals are your own.
 
Many are under a MCN, such as Fullscreen, which has a library of "coverable" songs.

Also, if a video is caught by Content ID and the claimer chooses to put ads on the videos, the original company gets the revenue from the video and usually leaves the video up without a strike. I personally have never gotten a strike for my covers. Most have been claimed by the original artist, so they are making the money off of it, which is perfectly fine by me.
 
If you are using the same tune (in the exact same way) with the same lyrics then you are using copyrighted material.

 
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