When a converted file sounds worse than the video you watched, the instinct is to blame the converter. Sometimes that is right. But the three real causes live in different places, and only one of them is fixable. Diagnose in order.
This is the most common and the least fixable. If the video itself had muddy, hissy, or thin audio (recorded on a phone mic, re-uploaded from a re-upload, ripped from another rip), then the MP3 is a faithful copy of a bad original. No setting, no tool, no post-processing restores detail that was never captured. The only fix: find a better upload of the same material and convert that instead.
YouTube's audio is already compressed in a lossy format. The converter decodes it and re-encodes it as MP3, which discards detail a second time. Each pass keeps the parts the encoder judges least important to throw away; two passes throw away more than one. This is why the setting matters: how YouTube's audio quality shapes the result, and why higher settings lose less on the second pass. This one is fixable: re-convert at the highest setting.
YouTube applies loudness normalization so videos play at a consistent volume. Your MP3 player probably does not. A converted file can sound "dull" or "quiet" next to the YouTube playback for no reason other than volume. Before judging quality, match the loudness: turn it up, or enable normalization in your music player if it offers it. Perceived quality and actual quality are easy to confuse here.
The honest version of "is 320kbps real" lives here: the 320kbps question, answered honestly.
Usually one of three: a poor source upload, extra loss from re-encoding, or a loudness difference between YouTube and your player. Diagnose in that order.
If the setting was low, re-convert at the highest. If the source upload was bad, only a better upload fixes it.