I think Sané tracked back. Not all the time, but enough to say that he did enough of the time not to get dropped in 17/18, and much of early 18/19.
I do think there was something going on behind the scenes that we don't know about. Maybe nothing major but enough to turn Pep sour. Maybe he stopped working hard in training. Or maybe he stopped being receptive to coaching. Or maybe he developed an attitude; he was prone to looking stroppy on off days for instance. I don't know.
Or maybe it was really his defending, and the difference between him and Mahrez is that Mahrez is actually really good during the week. I know he's not a model citizen, but he is a much older and more experienced player than Sané. And he's the captain of his national team. So maybe he more reliably gets his head down during the week and maybe he's a more positive influence in the team than we credit him for.
I do think it's more likely something on Sané. Pep has dropped players before for not feeling like they're up to it, most of them at some point in fact (Sterling, Walker, Laporte, and De Bruyne probably the sole exceptions from the outfield). But with Sané it felt like it was more. Like Touré but not as bad.