Yes, the new API makes much more sense. I'm just surprised and a bit disappointed it took so long to come about :(. I was always disappointed by the capabilities of production phones compared to what we could do in dev, but of course, in dev we didn't have all the constraints of running alongside the rest of the OS and only using the vendor's APIs!
As for your question, I'm rusty on the details. I definitely remember binning was used for some use-cases. For viewfinder, our hardware pipeline would generate a lower-resolution stream from the full-resolution stream used for encoding.