Yttrium oxyhydride (YHO) thin films have demonstrated significant potential as a smart material due to their reversible photochromic effect, exhibiting a photochromic contrast (ΔTvis) of up to ~50% under solar light illumination. However, the precise structure of YHO and the underlying mechanism of its photochromism are not yet fully understood, although mobile hydrogen is known to play an important role in YHO. The synthesis of YHO films relies on the oxidation of deposited yttrium hydride (YH₂) under ambient conditions. This work presents detailed insights into the synthesis, structure, composition, hydrogen diffusion, and photochromic properties of YHO and YHO/MoO₃ two-layer coatings prepared by reactive magnetron sputtering. XRD, FTIR, NRA, ERDA, XPS, SEM, ssNMR, and DFT calculations have been used to study the films. Achieving metallic YH₂ films with minimal oxygen contamination requires low deposition pressures (Ar+H₂); higher pressures result in films that are partially transparent during deposition. Post-oxidation occurs more rapidly at higher pressures due to the porous microstructure observed in surface and cross-sectional images. FTIR spectroscopy was employed to investigate the vibrational properties of YHO in clear, dark, and isotopically exchanged YDO films. Both experimental data and theoretical calculations were used to interpret the vibrational spectra. The detected vibrational bands are relatively broad, reflecting the disordered structure and small crystallite size, as confirmed by ssNMR and XRD. Highly transparent YHO/MoO₃ coatings exhibited an enhanced photochromic contrast of up to 60% compared to 40% of single YHO films after 24 hours of UVA/violet light illumination. This improvement is attributed to hydrogen intercalation from the (200)-textured polycrystalline YHO layer into the X-ray amorphous MoO₃, resulting in molybdenum reduction and the formation of absorbing molybdenum bronze (HxMoO₃), as it has been shown by a combination of XPS and NRA.