The selector selects entities although they are not in the currect Y position.

Tested it in a void world:

1. /kill @e[type=!player]
2. /tp 0 80 0
3. /execute if entity @e[y=70]

Step 3 returns: "Test passed, count: 1"

Also:

1. /kill @e[type=!player]
2. /summon minecraft:marker 0 70 0
3. /execute as @e[y=69,dy=2] run say hi

Step 3 ignores the marker entity.