Yiddish is basically a dialect of German, with a bunch of loan-words from Hebrew and various Slavic languages, written using the Hebrew alphabet. Most speakers of German can make some headway in understanding spoken Yiddish, but unless they are familiar with the the Hebrew alphabet the written language is not comprehensible to them.
Hebrew was chosen as the official language for Israel for two reasons. First, as already pointed out, Yiddish was largely unknown to Sephardic Jews, but both Ashkenazi and Sephardic communities had some familiarity with Hebrew from religious study and liturgical uses. Secondly, secular Zionists were keen to claim Hebrew as a daily vernacular, rather than having an important aspect of Jewish history and culture be the preserve only of religious Jews.