It seems to open up an editing window on top of the message page, and is using the new rich editor which works on mobiles. Given that the new rich editor has real advantages when editing profile now with formatting,I think it's half a step forward but also feels like a step backwards.
I do see a blue Back arrow in the top left hand corner which takes me back to the message I'm replying to, complete with the reply I'm entering. Tapping that reply takes me again into the rich editor.
The experience is clunky and I absolutely agree with comments above saying that it's harder to use than what we had before,but I can also see why Russ is going to press ahead with the changes to the new editor. It would just be nicer if the editor was in place on the message page rather than on an overlay.