the citationFormat plugin in OJS3 gets the input from the metadata of the article you are looking at. It is used in the “How to cite” function where you can output the article citation in different formats. It is not used to show the citations mentioned in the article full text .
In theory you could use the same citationFormat plugins to convert the output of the article citations form the JATS XML file. But, as I said, the citationFormat plugins only work with journal articles (for example here https://github.com/pkp/ojs/blob/master/plugins/citationFormats/apa/citation.tpl), not other types of citations like books etc.
I think that PKP is not planning to bring back the old citation tool from OJS2 but to work with the JATS XML formatted citations one way or another.