From looking at the imagery, it appears a big part of this is achieved through moving the earpiece/speaker up into the bezel of the phone, and squishing the other required sensors together.
That means there's still the infared camera, dot projector, flood illuminator, plus the proximity and ambient light sensors all in a space which is dramatically reduced from the notches used on iPhones since the iPhone X.
The image was shared by Apple leaker, Jon Prosser on Twitter, and gives a good indication of what we can expect to see on the iPhone 12.
Here you go, internet. pic.twitter.com/REfSw28KSX— Jon Prosser (@jon_prosser) April 20, 2020
Apple's approach to security and unlocking phones over the past couple of years has made it clear that it believes detailed facial recognition is the most secure way to authenticate, which is why the company has been reticent to move into in-display fingerprint sensors.
Since facial recognition using a camera alone can be easily duped, Apple's approach was to use a system which not only looks at how the person's face looks, but also measures the depth. That means contours of your face are measured accurately, to make sure you are, indeed, the person who owns the phone.
Android manufacturers like Samsung, OnePlus and Oppo have opted for in-display fingerprint sensors, reducing notches down to hole-punch cutouts in the screen to bring us those edge-to-edge displays.
For now, with Apple's brand message being so much about privacy and security, it wouldn't make sense to go back to a technology which it believes is less secure.
Which ever authentication/unlocking method you prefer, it's always worth remembering it's only as secure as the PIN code/password required to manually unlock your phone.