The ambient light and proximity sensor are just a small portion of the array in the notch.
For the notch to be substantially removed, they’d have to replace the flood illuminate, the infra red dot projector and its IR camera with something entirely different. This would still leave the camera and speaker.
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There are Camera that combines Infra Red together, whether that works well enough for Apple is a different questions though. Speaker can be done via on Screen OLED sound, although I have yet to see a decent implementation on this for phone.
No idea about Mic, Dot Projector. But at least it is quite possible to shrink it by half. ( Which brings hope to a small X like SE design, since the notch size matter a lot for small phones. )