Yes, they are still "socially distanced" (sort of), although they weren't while walking to the site of the photo-op. But the fact of the photo-op itself means that they are all together for this year's G-7 Summit, which is a big change from last year, and an another encouraging, welcome sign of returning normalcy.
The G-7 Summit may or may not make a major difference in terms of any actual accomplishments. The same for the forthcoming NATO summit and then the bilateral Biden-Putin Summit in Geneva. But this meeting in drizzly Cornwall is a welcome change from both the acrimonious meetings of the Trump years and the non-meetings of this past year.
Good news all around!