What is the current status of handwriting recognition on the iPad with an air pencil or stylus
iOS currently doesn't support handwriting recognition on OS level. There are apps for the Pro models (with Apple Pencil) that recognize handwriting, but this won't help you with Google Sheets or similar.
Things appear to be more bright with iOS 14 (the version to be released later in 2020). Apple will introduce handwriting recognition on OS level, at least for the Pro models, with a feature called Scribble. Check out https://www.apple.com/ipados/ipados-preview/ for the details already known.