No, you can still use IMAP with Thunderbird for example but you login to google account and Thunderbird get a token similar to how all OAuth works, what is blocked is using email/passowrd directly with your IMAP client.
The thing is, this is nowhere near new: it's been announced years ago, and slowly rolled out since 2019. Actually, IIRC, the rollout has been postponed at least once in 2020, due to covid (in order to not cut people off). I recall implementing Xoauth for IMAP, specifically for this.