The plan I think is that the new cars generate a lot more downforce from ground-effect, through carefully shaped channels on the base. This means that when they get close behind another car, they still keep most of the downforce, whereas a current car relying on barge boards etc loses a lot when right behind another car.
So in theory, yes, cars should be able to follow more closely without losing downforce... which should lead to better, closer racing, and more overtaking.
But yes, you'd still expect to see Mercedes first, followed by Red Bull. I think a lot of the Mercedes problems this year were due to how the changes affected high-rake and low-rake cars differently, which caught them out... so 2021 gave other teams a chance. Next year they could well be ahead again.