Yes! Your baby does see!
Like this newborn, we are born being able to see – yet I still hear well-educated adults saying that their newborn "looks as if she is looking at me but I know she can't see me."
Well the adult is incorrect.
The newborn sees but has more accurate vision in a range of about 10 – 12 inches. That's just about the distance baby is from the adult face when the baby is being held or being breast-fed.
As the baby ages, the vision improves – and we see babies actively watching and following objects with the eyes – but not yet with the head following.
Why? Go look at a picture of a newborn. See how large the head is? The head of a newborn is almost it's adult size – it's BIG. The head is well developed at birth and the eyes work – but it is too large for the baby to control. So the eyes follow but it will take more development for the head to follow.
As the baby develops, perception continues to be a very important part of the cognitive process. It’s part of how your child learns about the world. For the young infant, if an object cannot be seen – it does not exist! And this is why your new baby has no reaction to the removal of the toys from the crib…they no longer exist.