So I emailed OATEY and got the following response: "The yellow thread tape is approved for gas line installations and should not be used in potable water line assembe[sic]. We would recommend our Mega Tape or Gripp Tape."
Thanks for the info. However, I am not taking that as authoritative. If you find some actual documentation to that effect, that would be useful. I did find this:
https://www.oatey.com/ThreadSealants says "All Oatey thread sealant tapes are safe to use with potable (drinking) water." That sounds pretty straight forward to me.
Then I found this:
https://www.oatey.com/125959/Category/Tape
Oatey® has the PTFE tape you need, from economy-grade, low-density tape to MEGATAPE, the thickest tape on the market. Our PTFE tapes can be used on all threaded pipe, valves and fittings carrying acids, solvents, alkalis, steam, hot and cold water, LP gas, natural gas, oxygen and almost any chemical. Weather-resistant, flexible, low dielectric constant, chemically inert and usable at low temperatures, all of our tapes perform over a temperature range of -450° to 500° F and up to 10,000 psi. They are non-hardening, non-toxic, non-stick and non-flammable.
GRRIPTAPE was new to me, and it seems to have a useful feature. I did not find density or thickness info on that.
In the Oatey line, their pink tape is also higher density and thickness.
https://www.oatey.com/2372791/Product/Oatey-PTFE-Pink-Water-Line-Thread-Seal-Tape