I mean, technically, they could, but that's a property I could more see them adapting as a Disney+ show. It's maybe just a bit too niche for a wide-release movie.
Yeah, it's not a direct sequel, but it still feels like a sequel to the first one, it feels like how Days of Future Past followed First Class, plenty of things happened in between those 2 movies but they are still following the same characters and themes.
I think the film and its central question "Are you happy?" is actually the MOST logical next story for Dr. Strange. I'm not sure I'd think this the most logical next step if it had released somewhere in '17 or '18. But, given all the wacky hijinks Stephen has gotten into since, it oddly grounds him.
Despite not continuing the mordo stuff its a good follow up because its much darker and weirder than the first film and i liked exploring strange's character by contrasting him with the choices his variants made.
Visually, it's absolutely masterful. Visuals, action, cinematography, and performances are perfect. The story and writing does not compliment those things and film suffers fundamentally with regressing and repeating arcs (Wanda). Also between Mordo and Christine it seems we have a movie missing.