Architecture diagram on home page: https://iwd.wiki.kernel.org/
NetworkManager and ConnMan can optionally _USE_ iwd as a backend _INSTEAD OF_ wpa_supplicant.
iwd does _NOT_ use NetworkManager/ConnMan
Source: gentoo user who explicitly avoids the buggy disaster that is NetworkManager+wpa_supplicant whenever possible
Or maybe that's a diagram technique I'm just not used to.
It looks like you're right [0], so I stand corrected.
It also looks like it can't fully replace wpa_supplicant though:
> IWD and the NM backend are work in progress and the capabilities are still limited.
Distros like Ubuntu have defaulted to iwd as the NM backend for Wi-Fi for a couple years (and now in the LTS version). It really is a quite popular and stable replacement to wpa_supplicant.