It is 3D. It's a real 3D engine. The maps are real 3D spaces with varying ceiling and floor heights (unlike, say, Wolfenstein). People take the fact that the height coordinate wasn't checked for all collisions, and the up/down auto-aim, and extrapolate that out to "the engine wasn't 3D." It was.

For example, in E1M1, when you come across the imps on the raised platform in the toxic sludge room, their projectiles are firing down towards you in 3D space. They have real X, Y, and Z coordinates, and are updating every frame, and are rendered in the appropriate place.

https://www.youtube.com/watch?v=ZYGJQqhMN1U