Yes. CoAP is still present in your Device IC. CoAP is a complex protocol and implementations of the protocol have a steep learning curve. This is where Sensor API comes in. Sensor API can be used to implement most simple sensor use cases without the need for the sensor developer to know or understand the CoAP server code. It effectively hides 100% of the CoAP complexity from your sensor code.
A good point here is that when you port your sensor code from the Arduino hardware to the MCU of your choice you still need to tackle the CoAP server. However, the CoAP server code structure has been improved with porting in mind so the elements you need to consider are small and related to the MCU not CoAP (at least for most ARM based MCUs). More information on this topic will be available in other forum topics.