Continuous Audio Connection' keeps the audio connection active, preventing audio from cutting out and popping on a receiver or soundbar such as Sonos. The audio is sent decoded as uncompressed PCM (Dolby MAT) to also avoid volume fluctuations.
This does not mean that all content is now output as Dolby Atmos audio. Dolby MAT is simply an uncompressed PCM audio signal with the option of metadata - stereo is still stereo. If your receiver reports Atmos on the display when the source is not Atmos, it has been misconfigured by the manufacturer and you should consider turning off the new audio feature.
Please note that the audio feature only works on Apple TV 4K (2nd and 3rd Gen) and only if an Atmos-compatible sound system is connected.