The LED still works if I launch the camera app, or if I'm in a video chat, but not when signing in with Windows Hello, so I'm suspecting that it is only using the IR camera for that. However, when using the Surface Go, I'm only seeing the red light from the IR, but not the white LED from the webcam anymore.
When using Windows Hello on the Surface Pro I always see the red light from the IR camera, AND the white LED that lights up when the webcam is in use. We have both a Surface Go and a Surface Pro at home.